Designing Benefit–Cost Analyses for Homeland Security Policies

Abstract

The objective of this chapter is to outline the methodological and empirical issues associated with developing cost-benefit analyses for homeland security policies. The 9/11 attack on the United States transformed domestic and international perceptions of the ability of the public sector in developed economies in order to provide a secure environment for daily living. Security at this very general level affects nearly every aspect of life. With the scope of the impact on non-market behaviors that are motivated by fear and anxiety, it is difficult to imagine how current policy initiatives can restore earlier perceptions about security. For practical purposes, the change in the background environment for all private and public choices is probably best treated as irreversible. As a result, the chapter argues that the task of measuring the net benefits provided by homeland security policies should not be treated as an effort to restore a pre-9/11 baseline. The chapter describes how homeland security policy can reduce risk and/or consequences for terrorist activities.