Saturday, March 08, 2008

Costs and Benefits of Fighting Terrorists

Bjorn Lomborg and Todd Sandler discuss the costs and benefits of current spending preventing terrorism in this article. Here is an excerpt:
Grim-faced border guards and tough security measures at international airports provide powerful reassurance that the developed world is spending hundreds of billions of dollars to protect against terrorism. But is it worth it?

Although citizens of rich countries regard terrorism as one of the world’s greatest threats, trans-national terrorists take, on average, just 420 lives each year. So, have the terrorists succeeded in getting the developed world to invest poorly in counter-terrorism, while ignoring more pressing problems involving health, the environment, conflict, and governance?

Recently, the Copenhagen Consensus, whose purpose is to weigh the costs and benefits of different solutions to the world’s biggest problems, commissioned new research into the merits of different methods of combating terrorism. The results are surprising and troubling.

Global annual spending on homeland security measures has increased by about US$70 billion since 2001. Unsurprisingly, this initially translated into a 34 per cent drop in trans-national terrorist attacks. What is surprising is that there have been 67 more deaths, on average, each year.

The rise in the death toll is caused by terrorists responding rationally to the higher risks imposed by greater security measures. They have shifted to attacks that create more carnage to increase the impact of fewer attacks.

Increased counter-terrorism measures simply transfer terrorists’ attention elsewhere. Installing metal detectors in airports in 1973 decreased skyjackings but increased kidnappings; fortifying American embassies reduced the number of attacks on embassies but increased the number of assassinations of diplomatic officials. Since counter-terrorism measures were increased in Europe, the United States, and Canada, there has been a clear shift in attacks against US interests to the Middle East and Asia.

Spending ever-more money making targets “harder” is actually a poor choice.

Increasing defensive measures worldwide by 25 per cent would cost at least US$75 billion over five years. Terrorists will inevitably shift to softer targets. In the extremely unlikely scenario that attacks dropped by 25 per cent, the world would save about US$22 billion. Even then, the costs are three times higher than the benefits.

Put another way, each extra dollar spent increasing defensive measures will achieve – at most – about 30 cents of return. We could save about 105 lives a year in this best-case scenario. To put this into context, 30,000 lives are lost annually on US highways.

I was really interested and surprised by the statistics revealed in this article. With such media and political focus on terrorism, I kind of just assumed that the average number of deaths caused by terrorism per year would be much higher then 420. But then I thought about how this statistic, although it is probably correct, misconstrues and underemphasizes the September 11th attacks. Many of the deaths that were factored into the average probably all happened within a couple hours time on that morning of 9/11. The severity and shock of the attack put terrorism at the forefront of everyone’s mind. 420 deaths spread out over a year is extremely different than thousands of deaths happening all at once. Maybe spending billons to protect against terrorism is inefficient when only the statistical numbers are focused on but I bet if Americans and other people are the globe were interviewed, spending billions would be worth having a sense of security.
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