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 11: What we know and what we need to learn

Carol Mansfield and V. Kerry Smith

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


Economic information derived from the analysis of proposed policies can have important effects on decision processes. This is especially true when agencies are making rules that restrict private behavior. In these situations, there are implications for both public and private resource allocations. The Office of Management and Budget and congressional committees exercise oversight on commitment of public resources. The implicit commitment of private resources to comply with new rules, however, lacked a specific mandate for scrutiny until Executive Order (EO) 12291 in 1981. After that, all United States (US) presidents have reauthorized comparable orders, extending the types of information assembled but retaining the basic requirement that, where feasible, there should be measures of the net economic benefits of the proposed policies. For example, EO 12866, Section 1(b) (6) states that to the extent permitted by law and where applicable, ‘[e]ach agency shall assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs’.

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