The brief // by Ben FrankelIs the terrorist threat overhyped? -- II

Published 16 May 2011

Providing for homeland security is an expensive proposition; government-wide homeland security expenditures grew from about $12 billion in FY2000 to $66 billion in VY2009; DHS budget grew from $33 billion in 2003 to $55 billion in 2010 — an increase of 45 percent after adjusting for inflation; there are indirect costs to homeland security, too: the Office of Management and Budget (OMB) estimates that major homeland security regulations — by “major” OMB means regulations that costs more than $100 a year — cost the U.S. economy between $3.4 and $6.9 billion a year; since not too many Americans have been killed by terrorist acts, the post-9/11 added spending on homeland security means that the United States spends between $63 million and $630 million per one life saved; this an order of magnitude more than what experts, using accepted market measures, would consider the value of a statistical life

Providing for homeland security is an expensive proposition. Government-wide homeland security expenditures grew from about $12 billion in FY2000 to $66 billion in VY2009. DHS budget grew from $33 billion in 2003 to $55 billion in 2010 – an increase of 45 percent after adjusting for inflation.

There are indirect costs to homeland security. The Office of Management and Budget (OMB) estimates that major homeland security regulations – by “major” OMB means regulations that costs more than $100 a year – cost the U.S. economy between $$3.4 and $6.9 billion a year.

The figures are taken from a useful article by Benjamin Friedman (“Managing Fear: The Politics of Homeland Security” [Political Science Quarterly 126, no. 1 (spring 2011): 77-106]).

Friedman approvingly quotes analysis by Mark Stewart and John Mueller (“Cost-Benefit Assessment of United States Homeland Security Spending,” Center for Infrastructure Performance and Reliability, University of Newcastle, Australia, January 2009) that show that these expenditures are excessive.

In their study, Stewart and Mueller analyze the cost-effectiveness of the post-9/11 increases in homeland security expenditures. Since not too many Americans have been killed by terrorist acts, they two researchers find that the post-9/11 added spending on homeland security means that the United States spends between $63 million and $630 million per one life saved. Friedman notes that this is exponentially more than what experts, using accepted market measures, would consider the value of a statistical life.

Friedman invites us to reflect on whether or not these huge expenditures are justified.

His answer is in the negative. On Friday, we summarized the first part of his argument: the U.S. economy and society are not as brittle as some may think, and there are several characteristics which make the United States less vulnerable to terrorism. Among these characteristics:

  • The United States has strong liberal institutions which do not offer incentives for U.S. citizens to embrace terrorism and violence
  • The U.S. economy and government have a vast capacity to limit the consequences of any terrorist action
  • Economic trends – the move from a manufacturing economy to a service economy – make attacks on the American economy less effective, and damage more localized and easy to recover from.

The second line of argument Friedman advances is that terrorists do not have, and are not likely to aspire for, weapons of mass destruction. Thus, although the spread of technology has contributed to the democratization of killing, the threat we are facing from