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Evaluating the Risks, Costs, and Benefits of Homeland Security Spending

John Mueller

Ohio State University (OSU) - Department of Political Science

Mark G. Stewart

University of Newcastle (Australia)


APSA 2011 Annual Meeting Paper

The cumulative increase in expenditures on U.S. domestic homeland security over the decade since 9/11 exceeds one trillion dollars. It is clearly time to examine these massive expenditures applying risk assessment and cost-benefit approaches that have been standard for decades. Thus far, officials do not seem to have done so and have engaged in various forms of probability neglect by focusing on worst case scenarios; adding, rather than multiplying, the probabilities; assessing relative, rather than absolute, risk; and inflating terrorist capacities and the importance of potential terrorist targets. We find that enhanced expenditures have been excessive. To be deemed cost-effective in analyses that substantially bias the consideration toward the opposite conclusion, the security measures would have to deter, prevent, foil, or protect each year against 1,667 otherwise successful attacks that each inflicted some $100 million in damage (more than four per day) or 167 attacks inflicting $1 billion in damage (nearly one every two days). This is in the range of destruction of what might have happened had the Times-Square bomber of 2010 been successful. Although there are emotional and political pressures on the terrorism issue, this does not relieve politicians and bureaucrats of the fundamental responsibility of informing the public of the limited risk that terrorism presents, of seeking to expend funds wisely, and of bearing in mind opportunity costs. Moreover, political concerns may be over-wrought: restrained reaction has often proved to be entirely acceptable politically. And avoiding overreaction is by far the most cost-effective counterterrorism measure.

Number of Pages in PDF File: 28

Keywords: terrorism cost-benefit

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Date posted: August 1, 2011 ; Last revised: August 14, 2011

Suggested Citation

Mueller, John and Stewart, Mark G., Evaluating the Risks, Costs, and Benefits of Homeland Security Spending (2011). APSA 2011 Annual Meeting Paper. Available at SSRN: http://ssrn.com/abstract=1900472

Contact Information

John Mueller (Contact Author)
Ohio State University (OSU) - Department of Political Science ( email )
Columbus, OH 43210
United States
Mark G. Stewart
University of Newcastle (Australia) ( email )
University Drive
Callaghan, NSW 2308
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