Benefit–Cost Analyses for Security Policies

Benefit–Cost Analyses for Security Policies

Does Increased Safety Have to Reduce Efficiency?

Edited by Carol Mansfield and V. K. Smith

Benefit–Cost Analyses for Security Policies describes how to undertake the evaluation of security policies within the framework of benefit–cost analysis and offers a unique contribution to analysis of homeland security regulations in the United States. The authors outline how established procedures for benefit–cost analysis must adapt to meet challenges posed by current security policy, through examining specific security related regulations. The logic of risk assessment, selection of a discount rate, valuation of travellers’ time when delayed due to screening, valuation of changes in risks of injury or death, and impacts of terrorist events on the economy as a whole are among the issues discussed. An outline of the research and policy evaluation steps needed to build robust benefit-cost methods to evaluate security related regulations in the future is presented in the book.

Chapter 5: Dealing with safety in UK public sector project appraisal

Michael Jones-Lee

Subjects: economics and finance, methodology of economics, public sector economics, politics and public policy, terrorism and security


It is an inescapable fact of life that virtually every activity that we undertake carries some risk of death or injury. It is also the case that in most situations risk can be reduced, but only at a cost. That is, safety can usually be improved, but only by using up scarce resources that could otherwise have been devoted to alternative beneficial uses. This means that if society’s resources are to be allocated efficiently and to greatest advantage, then in public sector decisions concerning the provision of safety in the form of a public good rather than a marketed product, some means must be found to place a value on safety improvement so that benefits can be compared directly with costs. But how is the value of safety to be defined and estimated in practice? Until 1988 monetary values for the prevention of fatal and non-fatal injuries used by the UK Department of Transport – which was the first UK public sector agency to employ explicit monetary values of safety in cost–benefit analysis – were derived on the basis of the so-called ‘gross output’ approach.

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