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 10: Applicability of benefit transfers for evaluation of homeland security counterterrorism measures

Kevin Boyle, Sapna Kaul, Ali Hashemi and Xiaoshu Li

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


Hobijn and Sager (2007) estimate that spending on homeland security in the United States increased by $44 billion from 2001 to 2005. They further estimate that 34 percent of this increase was dedicated to ‘protection of critical infrastructure and key assets’ and 11 percent to ‘emergency preparedness and response’. Although no one disputes the Department of Homeland Security and the security actions it promulgates, questions have been raised about the economic efficiency of specific protection activities. Shapiro (2008) argues that there is a need to know whether the benefits of homeland security actions exceed costs, but the costs of homeland security measures have been underestimated and the benefits left uncalculated (see also Farrow and Shapiro, 2009 ). Farrow (2007) has proposed several approaches to investigating the cost-effectiveness of specific homeland security policies. Smith et al. (2009) go one step further to estimate United States households’ willingness to pay (WTP) to prevent a shoulder-mounted missile attack on a commercial airline.

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