Tyler gives reasons why politicians will rebuild New Orleans even if cost-benefit aalysis would indicate otherwise.
This quote is from Ed Glaeser:
"We have an obligation to people, not to places," says Edward Glaeser, a Harvard professor who specializes in urban economics. "Given just how much, on a per capita basis, it would take to rebuild New Orleans to its former glory, lots of residents would be much [better off] with $10,000 and a bus ticket to Houston."
Sounds like an un-compassionate statement. What kind of person would desire for a city NOT to be rebuilt? Answer: an economist who values local individuals well being more than that of non-locals (tourists, postcard sellers, public opinion, etc.)--that is a compassionate economist without the sugar coating.
Becker & Posner also opine here.