The elegant beauty of cost-benefit analysis

Writing on the Foreign Affairs web site (“Hardly Existential: Thinking Rationally about Terrorism”), an American political scientist and an Australian civil engineers offer the following “elemental observation”: “As a hazard to human life in the United States, or in virtually any country outside of a war zone, terrorism under present conditions presents a threat that is hardly existential. Applying widely accepted criteria established after much research by regulators and decision-makers, the risks from terrorism are low enough to be deemed acceptable. Overall, vastly more lives could have been saved if counterterrorism funds had instead been spent on combating hazards that present unacceptable risks.” I guess the geek squad working for Robert McNamara 53 years ago would have cheered such a clear-headed approach to existential threats. To be fair to the two respected scholars/experts, they do recognize that the psychological effect of terrorist attacks is slightly different from the anguish caused incidents like people drowning in their own bathtubs. Luckily, government experts in charge of putting some neat numbers on hazardous risks have already made some adjustments to reflect this awareness: “In order to deal with the emotional and political aspects of terrorism, a study recently conducted for the U.S. Department of Homeland Security suggested that lives lost to terrorism should be considered twice as valued as those lost to other hazards. That is, $1 billion spent on saving one hundred deaths from terrorism might be considered equivalent to $1 billion spent on saving two hundred deaths from other dangers.” To their credit, the authors of the Foreign Affairs piece do recognize that their “rational analysis” is unlikely to enlighten high-level deciders as Washington remains ridden with bureaucratic inertia and psychological rigidity: “The cumulative increased cost of counterterrorism for the United States alone since 9/11 -- the federal, state, local, and private expenditures as well as the opportunity costs (but not the expenditures on the wars in Iraq or Afghanistan) -- is approaching $1 trillion. However dubious and wasteful, this enterprise has been internalized, becoming, in Washington parlance, a ‘self-licking ice cream cone,’ and it will likely last as long as terrorism does.” This probably points to the somewhat limited utility of number crunching as a policy crutch on issues which even number crunchers can recognize as existential – at least potentially so.