Study Questions Cost of Efforts to Fight Terrorism

Economist to Present Results at Prestigious Copenhagen Consensus Meeting

May 21, 2008

Since 9/11, annual global spending to combat terrorism has increased by about $70 billion, but according to a new study led by UT Dallas economist Todd Sandler, governments have gotten very little in return.

Sandler worked with Daniel Arce, also an economist from the UT Dallas School of Economic, Political and Public Policy, and Walter Enders from the University of Alabama, to compute the cost benefits for five approaches used to fight transnational terrorism.

Their calculations accounted for changes in GDP, the value of lives lost or injured, the costs of increased homeland security and proactive, offensive measures.

Copenhagen Consensus logo
The Copenhagen Consensus studies global problems and priorities.

This study, the first of its kind, was commissioned by the Copenhagen Consensus, an international project to weigh the costs and benefits of different solutions to the world’s biggest problems and to identify whether the current global priorities are the right ones.

The research found that increasing homeland security worldwide by 25 percent resulted in a payback of about 30 cents on a dollar. 

Increased offensive measures, like those against the Taliban after 9/11, had a payback of 8 to 12 cents on a dollar.  The biggest benefits came from increased cooperation among police forces and governments.  This approach paid back $5 to $15 per dollar spent, depending on cost assumptions.

“The most effective solutions are the cheapest, but they must overcome the greatest obstacles that require either greater international cooperation or more sensitive and farsighted policymaking,” said Dr. Sandler, who is the Vibhooti Shukla Professor of Economics and Political Economy at UT Dallas.

Sandler will present the study’s findings at the 2008 Copenhagen Consensus May 26 and 27.  He will join colleagues from Harvard, Oxford and Cornell, and more than 55 international economists, including four Nobel laureates, in addressing 10 of the world’s biggest challenges and assessing more than 50 solutions.

Sandler will argue that global priorities in combating terrorism need to be rethought.  “There’s no panacea for terrorism, and that’s scary, but we shouldn’t allow fear to distract us from the best ways to respond to this threat,” said Sandler. 


Media contacts:  Audrey Glickert, UT Dallas, (972) 883-4320, audrey.glickert@utdallas.edu
or the Office of Media Relations, UT Dallas, (972) 883-2155, newscenter@utdallas.edu

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Todd Sandler
Dr. Todd Sandler (left) and Dr. Daniel Arce worked on the terrorism cost-benefit analysis.

Terrorism Study Overview

Since 9/11, global spending to combat terrorism has increased by about $70 billion a year, but governments have little to show for the expenditures.

Methodology
The study calculates costs and benefits from changes in GDP, value of lives lost or injured, costs of increased homeland security, and the costs of offensive measures.

Key Findings
• Increasing homeland security worldwide by an additional 25 percent results in a payback of about 30 cents on the dollar.
• Increased offensive measures like those against the Taliban after 9/11 offer a payback of 8 to 12 cents on a dollar.
• The biggest benefits would come from increased cooperation among police forces and governments, returning $5 to $15 for every dollar spent.

Implications
• Governments need to subject major anti-terrorism initiatives to similar cost-benefit analyses. By failing to cooperate, governments overdefend targets and underinvest in united approaches, such as coordinated intelligence and police actions.

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