A cost–benefit analysis of terrorist attacks. Issue 2 (23rd February 2018)

• Record Type: Journal Article
• Authors: Hausken, Kjell
• Is Part Of: Defence and peace economics. Volume 29:Issue 2(2018)
• Page Start: 111
• Page End: 129
• Publication Date: 2018-02-23
• Subjects: Cost -- Benefit -- Terrorism -- Expected utility -- Value of human lives -- Economic value -- Influence value; C2 -- C6 -- D7 -- H56; Military readiness -- Economic aspects -- Periodicals; Disarmament -- Economic aspects -- Periodicals; 338.47355
• DOI: 10.1080/10242694.2016.1158440
• Languages: English
• ISSNs: 1024-2694

Abstract

Abstract : A cost–benefit analysis of terrorist attacks is developed and placed within a systematic theoretical structure. For the target or object of the attack, we consider the lost value of human lives, lost economic value, and lost influence value, counted as benefits for the terrorist. The corresponding losses for the terrorist are counted as costs. The terrorist attacks if benefits outweigh costs. Bounded rationality is enabled where the three kinds of benefits and costs can be weighted differently. We account for two ex ante probabilities of successful planning and attack, and enable the terrorist to assign different weights to its multiple stakeholders. We introduce multiple time periods, time discounting, attitudes towards risk, and subcategories for the benefits and costs. The cost–benefit analysis is illustrated with the 11 September 2001 attack, and 53 incidents in the Global Terrorism Database yielding both positive and negative expected utilities. The paper is intended as a tool for scientists and policy-makers, as a way of thinking about costs and benefits of terrorist attacks.