Benefit–Cost Analyses for Security Policies
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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.
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Chapter 8: Macroeconomic consequences of terrorist attacks: estimation for the analysis of policies and rules

Adam Rose


The design of policies and rules to reduce the risk of terrorist attacks should ideally be evaluated according to an objective decision-making framework such as benefit–cost analysis (BCA). Although BCA is straightforward in principle, it often involves many serious complications when applied to the area of terrorism. Direct costs of interdiction are straightforward in terms of enumerating expenditures on equipment and manpower. However, complications arise here, because tactics such as increased screening and surveillance cause significant spillover effects, including inconvenience, delays and congestion, as well as potentially positive or negative changes in the overall business environment. Direct benefits of risk reduction are the avoided losses. These losses begin with direct property damage and direct business interruption, as well as injuries and deaths, though the measurement of the latter can be quite controversial. More difficult to assess are the indirect impacts that spread through a regional or national economy. The estimation of losses is further complicated by some unique considerations relating to terrorism in the realms of resilience and behavioural responses.

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