Measuring Terrorism

Zurich IEER Working Paper No. 171

44 Pages Posted: 5 Jan 2004

See all articles by Bruno S. Frey

Bruno S. Frey

CREMA; University of Basel

Simon Luechinger

University of Lucerne

Date Written: October 2003


Terrorism will be high on the political agenda for many years to come. Various policies are open to a government fighting terrorism but, in any case, considerable costs are involved. In the competition for political support, the costs and benefits of anti-terrorism policies will be debated. Better information about terrorism and its consequences can improve policy outcome if there is electoral competition. Over the last few years, economic scholars have analysed the effects terrorist acts have on various aspects of the economy. The findings of these impact studies are summarised in this paper. They capture, however, only part of the overall utility losses. Hence, several approaches to value public goods and conceptual issues concerning their application to terrorism are discussed. In particular, the hedonic market approach, the averting behaviour method, the contingent valuation method and vote and popularity functions are reviewed. Further, an exploratory analysis of estimating individuals' utility losses using life satisfaction or happiness data is presented.

This paper also discusses a substantially different approach combining measurement and decision-making, namely popular referenda.

Suggested Citation

Frey, Bruno S. and Luechinger, Simon, Measuring Terrorism (October 2003). Zurich IEER Working Paper No. 171, Available at SSRN: or

Bruno S. Frey (Contact Author)

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002

Simon Luechinger

University of Lucerne ( email )

Frohburgstrasse 3
P.O. Box 4466
Lucerne, 6002

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