The Costs of Terrorism Hysteria

Regarding the question about the cost of terrorism, it is incalculable. First of all, the right wing pushes the idea that the public overestimates the risk of harm from corporate causes. The Mueller article that I posted applies the same reasoning to the war on terror.


But the costs, as I said, are incalculable.  Experienced travelers try to carry as much with them as possible because of the frequency of lost baggage.  How can you put a price on lost baggage unless you have a market for reliable luggage delivery?  What about the loss of personnel whose employment is derailed because of some security foul up?

What about perhaps the greatest cost — that fearful people are more likely to reelect the idiots who manufacture the fear?  How do you think the Iraqis would calculate the costs of Bush?


Finally, here’s a brief section from my book, Manufacturing Discontent about cost-benefit analysis and terrorism:

The War on Terror and Statistical Murder

To his credit, John Graham did issue a call for experts to attempt to quantify the indirect costs of inconvenience and loss of privacy associated with tighter domestic security. In Graham’s words, “People are willing to accept some burdens, some intrusion on their privacy and some inconvenience” (Andrews 2003). Apparently, he merely wanted to learn how much people were willing to sacrifice rather than to evaluate the costs and benefits of the domestic security regulations.

Two of Graham’s colleagues from Harvard, Kip Viscusi and Richard Zeckhauser, seem to have done the sort of study that he had in mind — at least the New York Times article that drew attention to Graham’s call for a study of the costs and benefits of policies to prevent terrorism seemed to suggest as much (Andrews 2003).

This linkage between Graham and the researchers made eminent sense. The first of these two authors, Kip Viscusi, has a long career of advocacy for tort reform. Between 1987 and 2002, he had earned over $600,000 as an expert witness in liability cases for the tobacco industry. He had estimated that the states actually enjoyed a budgetary windfall from tobacco sales because people died more quickly as a result of smoking (Glenn 2002). Viscusi and his co-author, Richard Zeckhauser, were both important figures in developing the “Aging Initiative.” To his credit, Zeckhauser was one of the authors of the earlier-discussed 1975 report that indicated that employers faced the equivalent of a risk of only 52 cents for violating safety and health regulations.

How did Viscusi and Richard Zeckhauser go about applying cost-benefit analysis to the War on Terror? They asked some typical Americans — students enrolled at Harvard Law School — if they would support racial profiling at airports if that practice would prevent a 60 minute delay for all other air passengers, assuming that they themselves would not be singled out as suspicious travelers. They found that 73.9 percent favored profiling others to save 60 minutes so long as they would not be singled out for profiling. The number fell to 56.3 percent if the students could be singled out — a less than likely experience for most Harvard law students (Viscusi and Zeckhauser 2003).

This study calls out for two comments. First, just imagine how industry would howl if the Environmental Protection Agency were to consider the results of a survey that asked individuals who believed themselves to be affected by dangerous pollutants from a corporate chemical plant, if they would accept an exhaustive government regulatory audit of the management of all properties in the neighborhood that seriously affected human health. Just as these law students would not mind racial profiling of others, the people near the chemical plant would probably not mind the audit of the management of properties owned by fictitious corporate individuals.

Second, this study made no effort to measure the potential benefits of racial profiling; instead, the study implicitly assumed that racial profiling would be an effective measure to prevent terrorism. Interestingly enough a little more than a decade earlier, Viscusi and Zeckhauser had written:

Often too much weight is placed on risks of low probability but high salience (such as those posed by trace carcinogens or terrorist action); risks of commission rather than omission; and risks, such as those associated with frontier technologies, whose magnitude is difficult to estimate. Too little effort is spent ameliorating voluntary risks, such as those involving automobiles and diet. [Viscusi and Zeckhauser 1990, p. 559]

In this earlier study, Viscusi and Zeckhauser brought together several threads of the statistics of risk: (1) People have difficulty evaluating risks; (2) they will tend to be susceptible to overreacting to the fears of terrorism; (3) the blame for many of the problems associated with risk lies with individual behavior rather than corporate malfeasance. Their first point is indisputable. Their third point reveals their own corporate-leaning bias. Their second point anticipated just how effective the war on terrorism would be in distracting people from their real interests.

So, sadly, neither John Graham, nor his colleagues, have do not the slightest interest in pursuing a take-no-hostages cost-benefit approach to domestic security measures comparable to the skeptical stance Graham and his coterie advocate for regulations that inconvenience business. As the New York Times article noted: “Mr. Graham, a passionate champion of cost-benefit analysis who taught at Harvard before joining the administration, stopped short of saying that government officials might somehow assign a price for costs like lost privacy or convenience” (Andrews 2003).

Indeed, when Graham’s office presented its annual report to Congress about the costs and benefits of government regulations, one of the four chapters related to 69 regulations associated with homeland security. The agency did not bother to assign benefits to any of these regulations. Its efforts to estimate costs were modest, to say the least, offering only crude estimates for a mere 13 of these regulations (Office of Management and Budget. Office of Information and Regulatory Affairs 2003). In the 2004 draft report, the agency restricted its discussion of the costs of homeland security regulations to rules imposed by the Coast Guard. This approach reduced the estimated cost of homeland security rules to one-tenth of one percent of all regulatory costs (Office of Management and Budget. Office of Information and Regulatory Affairs 2004a).

To my knowledge, nobody has applied a Graham-like methodology to evaluate government efforts to protect the public against the potential risks posed by enemies of this nation. The closest example that I have seen came in a brief mention of a calculation by the famous artificial intelligence expert, Marvin Minsky, that the probable cost per life saved from increased airline security was $100 million and that other uses for the money could save far more lives (Begley 2002).

Similarly, Jeffrey Reiman observed that in 1973, the federal government employed 1500 marshals to guard airliners against hijackers, compared to 500 inspectors for the Occupational Safety and Health Administration (Reiman 1996, p. 70). As mentioned earlier, OSHA inspectors are fairly effective; the problem is that they are understaffed and enforcement, once they uncover safety violations, is inadequate to say the least. Considering that almost 70,000 people per year die from occupational injuries and diseases, increasing the number of OSHA inspectors makes good sense. Nobody to date — certainly not John Graham — has accused the government of statistical murder on this account.

One government program, associated with the war on terrorism threatens to create statistical murders far less hypothetical than those identified by the John Graham school of cost-benefit analysis. In mid-2003, the Bush administration proposed to divert $145 million from infectious disease funding in order to develop an anthrax vaccine (Friedman 2003). The Centers for Disease Control report that as of December 2001, 42 million people are estimated to be living with just one infectious disease — HIV/AIDS. In contrast, five people died from the anthrax attacks. Similarly, the government has embarked on an ambitious program to inoculate the American public against smallpox, a disease that currently affects nobody, with a vaccine that itself poses serious health risks.

While protection against smallpox and anthrax might deter a potential terrorist from launching an improbable attack with such weapons, programs to defend against these diseases would not be particularly effective in eliminating terrorism. The most likely response to such a strategy would be to cause any would-be bio-terrorist simply to shift to an alternative method. Certainly, anthrax and smallpox do not exhaust the lethal possibilities of bio-warfare. At the same time, restoring our deplorably underfunded public health system to a reasonable level would do far more to protect the public from present threats from infectious diseases, besides shoring up society against bioterrorism.



But the costs, as I said, are incalculable. Experienced travelers try to carry as much with them as possible because of the frequency of lost baggage. How can you put a price on lost baggage unless you have a market for reliable luggage delivery? What about the loss of personnel whose employment is derailed because of some security foul up?

What about perhaps the greatest cost — that fearful people are more likely to reelect the idiots who manufacture the fear? How do you think the Iraqis would calculate the costs of Bush?

1 comment so far

  1. chris b on

    I applaud you, Sir, for your incisive analysis. I intend to bookmark your site and read many other posts. Thank you for speaking sanely and compassionately on issue of such tremendous importance.

    FYI, I found your site from a google search for: how many people die each year from corporate malfeasance? If you know of any reliable sources for such a statistic I’b be much appreciative.


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