Does Increased Safety Have to Reduce Efficiency?
Edited by Carol Mansfield and V. K. Smith
Chapter 8: Macroeconomic consequences of terrorist attacks: estimation for the analysis of policies and rules
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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