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Dealing with Terrorism – Stick or Carrot?

Bruno S. Frey

Emphasising a positive approach to dealing with terrorism (the carrot), this book provides a critique of deterrence policy (the stick) which can be ineffective and even counterproductive, and proposes three alternative and effective anti-terrorist policies: Decentralisation reduces vulnerability to terrorist attacks. A system with many different centres is more stable due to its diversity, enabling one part to substitute for another; Positive incentives can be offered to actual and prospective terrorists not to engage in violent acts. Incentives include: reintegrating terrorists into society, welcoming repentents and offering them valued opportunities; and Diverting attention by naming several terrorist groups potentially responsible for a particular terrorist act. The government thus supplies more information than the terrorist responsible would wish.
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Chapter 3: Terrorism Analysed

Bruno S. Frey


THE ECONOMIC APPROACH TO TERRORISM What Is It? The term ‘economic’ has two quite different meanings. On the one hand, it designates a part of society, the economy. On the other hand, it refers to a discipline, economics. This academic field is characterised by a particular way of looking at society. The term ‘economic’ is in this chapter to be understood in the second way, namely as the discipline of economics. The economic way of thinking starts with individuals having goals (called preferences) and acting in a particular environment (being subject to restrictions). The major constraints individuals face are the time given (a day has 24 hours), the income received and assets one can dispose of, the limited mental capacities (for instance the bounded cognitive faculties to deal with complex issues) and the institutional conditions (such as the extent of the market sphere or democratic participation rights). Individuals behave in an uncertain world. Information is only gathered to the extent that it is perceived to be useful; the economic approach does not assume that individuals are fully informed. Individuals are taken to be able to cope well with the decisions required to successfully pursue their own aims, taking into account the restrictions imposed from outside. They are assumed to maximise their own utility, subject to constraints. Individuals act consistently, and in this sense behave rationally. This model of human behaviour has been applied to many different issues. It characterises human action not only in the economy, but also...

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