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

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  • V. Kerry Smith
  • Carol Mansfield
  • Laurel Clayton

Abstract

This paper reports estimates for the ex ante tradeoffs for three specific homeland security policies that all address a terrorist attack on commercial aircraft with shoulder mounted missiles. Our analysis focuses on the willingness to pay for anti-missile laser jamming countermeasures mounted on commercial aircraft compared with two other policies as well as the prospect of remaining with the status quo. Our findings are based a stated preference conjoint survey conducted in 2006 and administered to a sample from Knowledge Networks' national internet panel. The estimates range from $100 to $220 annually per household. Von Winterfeldt and O'Sullivan's [2006] analysis of the same laser jamming plan suggests that the countermeasures would be preferred if economic losses are above $74 billion, the probability of attack is larger than 0.37 in ten years, and if the cost of the measures is less than about $14 billion. Our results imply that, using the most conservative of our estimates, a program with a cost consistent with their thresholds would yield significant aggregate net benefits. More generally, this research grows out of a need to measure the benefits of an iconic public good -- national defense -- to assess the economic efficiency of Department of Homeland Security policies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14325.

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Date of creation: Sep 2008
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Publication status: published as V. Smith & Carol Mansfield & Laurel Clayton, 2009. "Valuing a homeland security policy: Countermeasures for the threats from shoulder mounted missiles," Journal of Risk and Uncertainty, Springer, vol. 38(3), pages 215-243, June.
Handle: RePEc:nbr:nberwo:14325

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Cited by:
  1. Smith, V. Kerry & Mansfield, Carol & Allen Klaiber, H., 2013. "Terrorist threats, information disclosures, and consumer sovereignty," Information Economics and Policy, Elsevier, vol. 25(4), pages 225-234.

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