The cumulative increase in expenditures on US 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, they would have to deter, prevent, foil, or protect against 1,667 otherwise successful Times-Square type attacks per year, or more than four per day.
Terror, Security, and Money: Balancing the Risks, Benefits, and Costs of Homeland Security (link goes to PDF). A paper by John Mueller and Mark Stewart prepared for presentation at the panel, “Terror and the Economy: Which Institutions Help Mitigate the Damage?” at the Annual Convention of the Midwest Political Science Association Chicago, IL, April 1, 2011. Also from the summary:
In seeking to evaluate the effectiveness of the massive increases in homeland security expenditures since the terrorist attacks on the United States of September 11, 2001, the common and urgent query has been “are we safer?” This, however, is the wrong question. Of course we are “safer”—the posting of a single security guard at one building’s entrance enhances safety, however microscopically. The correct question is “are the gains in security worth the funds expended?” Or as this absolutely central question was posed shortly after 9/11 by risk analyst Howard Kunreuther, "How much should we be willing to pay for a small reduction in probabilities that are already extremely low?”
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