Do We Spend Too Much on Preventing Terrorism? The Comparison with Auto Accidents

One argument often made against taking significant actions against terrorism is that the number of people killed or injured by terrorism is, by comparison with other causes, extremely small.  So even 9/11, which resulted in the death of nearly 3000 people, was a mere fraction of the approximately 35,000 people who die every year from car accidents.  The idea seems to be that we should be spending much less money on preventing terrorism, perhaps no more per life saved than we do for each life saved from car accidents.  That we do not do this suggests a severe innumeracy of our political system.

I am not so sure.  Let’s start with the so called equivalence of car accident deaths with terrorist deaths.  There may be such an equivalence in important senses, but that does not mean the costs of the two type of deaths are equivalent.  People are much more scared of being killed by a terrorist than being killed in a car accident.  Consequently, they change their behavior much more in response to terrorism.  After 9/11, travel in the country dramatically fell off and the existing recession was deepened.  Thus, the economic consequences of terror deaths are much greater than car accident deaths.  While one might argue that people are acted irrationally, even if true, that does not matter.  The political system wisely takes those additional costs into account.

A second different between terror deaths and car accident deaths is that there is much greater variance between them.  Car accident deaths are fairly regular.  Each year the number killed on U.S. highways is about the same.  By contrast, the number of deaths from terrorism can diverge significantly.  And if less money were spent on preventing them, they would arguably diverge even more.

Thus, if a large terrorist act were to occur, then many tens of thousands of people could easily be killed all at once.  This variability makes it hard to predict what the expected number of deaths from terrorism are.  Just because few people have been killed in the past does not mean that large number may not be killed in the future.  One never knows when one will encounter a black swan.  Consequently, the comparisons between the number of people killed from terrorism and accidents in the past is misleading as a comparison of the real risks involved.

In the end, I don’t know how much the U.S. ought to be spending in attempting to prevent terrorism.  Perhaps we are overspending (and it seems quite likely we are not spending efficiently.)  But I do believe that comparisons between the number of people killed by terrorism and other deaths, such as from accidents, is misleading.  We need to think harder about these questions.