Most antiterrorism spending is wasteful

The March 6, 2008 issue of The Economist features lots of interesting articles (it includes one of the quarterly technology reviews), one of which is "Feel safer now?" This is a report on a study by economists in Texas and Alabama commissioned by the Copenhagen Consensus, which looks at the effects of increased spending on counterterrorism efforts and "homeland security" globally since 2001, and the effects. They calculate that while such spending has increased by somewhere between $65 billion and $200 billion a year, the benefits are far smaller than the costs of terrorism, which were about $17 billion in 2005. While the spending may have prevented some incidents, even if this extra spending prevented 30 attacks like the July 2005 London bombings every year, it would still be more expensive than the damage from terrorism. The authors suggest that the benefits from increased counterterrorism spending have been about 5-8 cents per each dollar of spending, whereas if instead money was spent specifically on disrupting terrorist finances, $5-$15 of benefits could be obtained for each dollar spent.