Valuing a Homeland Security Policy: Countermeasures for the Threats from Shoulder Mounted Missiles

Publication Type: 
V. Kerry Smith
Carol Mansfield
Laurel Clayton
Threats to security have economic consequences. It is impossible to assess the full scope of the emotional loss to families affected by 9/11. Many people around the world would no doubt suggest at that time they also experienced tangible losses even though they did not have family or friends who were directly affected. These losses cannot be measured. But some economic impacts can be measured. Preliminary ex post assessments of the economic impacts of 9/11, considering health effects (excluding mortality), damages to structures, ripple effects throughout the economy, and so forth suggest losses in the tens if not hundreds of billions of dollars. Nonetheless, there remains a potentially larger ex ante effect. Persistent terrorism risks have the potential to undermine public confidence in any society. Such a loss of confidence could result in significant changes in how people choose to live their lives and conduct their daily activities. These alternative decisions no doubt influence the composition and level of activity in the economies affected by terrorist threats.