Measuring Terrorism

Bruno Frey and Simon Luechinger

No 171, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: 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.

Keywords: Terrorism; Public Good; Cost-Benefit-Analysis; Willingness-to-Pay; Hedonic-Market- Approach; Averting-Behaviour-Method; Contingent-Valuation; Popularity Functions; Happiness; Referendum (search for similar items in EconPapers)
JEL-codes: D61 D74 H41 H56 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-law and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Chapter: Measuring terrorism (2005)
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