Applicability of benefit transfers for evaluation of homeland security counterterrorism measures

Hobijn and Sager (2007) estimate that spending on homeland security in the United States increased by $44 billion from 2001 to 2005. They further estimate that 34 percent of this increase was dedicated to ‘protection of critical infrastructure and key assets’ and 11 percent to ‘emergency preparedness and response’. Although no one disputes the Department of Homeland Security and the security actions it promulgates, questions have been raised about the economic efficiency of specific protection activities. Shapiro (2008) argues that there is a need to know whether the benefits of homeland security actions exceed costs, but the costs of homeland security measures have been underestimated and the benefits left uncalculated (see also Farrow and Shapiro, 2009). Farrow (2007) has proposed several approaches to investigating the cost-effectiveness of specific homeland security policies. Smith et al. (2009) go one step further to estimate United States households’ willingness to pay (WTP) to vprevent a shoulder-mounted missile attack on a commercial airline.