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Measuring Terrorism

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  • Bruno S. Frey
  • Simon Luechinger

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.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 171.

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Handle: RePEc:zur:iewwpx:171

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Keywords: Terrorism; Public Good; Cost-Benefit-Analysis; Willingness-to-Pay; Hedonic-Market- Approach; Averting-Behaviour-Method; Contingent-Valuation; Popularity Functions; Happiness; Referendum;

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Cited by:
  1. Axel Dreher & Justina A. V. Fischer, 2009. "Government decentralization as a disincentive for transnational terror? An empirical analysis," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 313/2009, Department of Economics, University of Hohenheim, Germany.
  2. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part II)," Discussion Papers of DIW Berlin 1050, DIW Berlin, German Institute for Economic Research.
  3. Axel Dreher & Justina Fischer, 2008. "Decentralization as a disincentive for transnational terror? System stability versus government efficiency: an empirical test," TWI Research Paper Series, Thurgauer Wirtschaftsinstitut, Universität Konstanz 41, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  4. Peter Kurrild-Klitgaard & Mogens Justesen & Robert Klemmensen, 2006. "The political economy of freedom, democracy and transnational terrorism," Public Choice, Springer, Springer, vol. 128(1), pages 289-315, July.

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