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The Benefit-Cost Analysis of Security Focused Regulations

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Abstract

Security focused regulations have been largely exempt from the benefit-cost type of analysis required for major Federal regulations and done routinely in areas such as transportation, environment and safety. among the reasons offered for exemption are the analytical difficulties of security issues involving complex or poorly understood probabilities and consequences. This paper investigates the magnitude of security focused regulations, a framework for developing an expected costs analysis of regulations, and the current "break-even" analysis used by the Department of Homeland Security. Key assumptions implicit in the current analysis are identified and suggestions are made for the difficult evolution of security regulations toward a more explicit benefit-cost analysis.

Suggested Citation

  • Scott Farrow & Stuart Shapiro, 2009. "The Benefit-Cost Analysis of Security Focused Regulations," UMBC Economics Department Working Papers 09-101, UMBC Department of Economics.
    • Handle: RePEc:umb:econwp:09101
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    File URL: http://www.umbc.edu/economics/wpapers/wp_09_101_DHSFarrowShapiro.pdf
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    References listed on IDEAS

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    1. Scott Farrow, 2007. "The Economics Of Homeland Security Expenditures: Foundational Expected Cost‐Effectiveness Approaches," Contemporary Economic Policy, Western Economic Association International, vol. 25(1), pages 14-26, January.
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    3. Cheng Shaoming & Stough Roger R. & Kocornik-Mina Adriana, 2006. "Estimating the Economic Consequences of Terrorist Disruptions in the National Capital Region: An Application of Input-Output Analysis," Journal of Homeland Security and Emergency Management, De Gruyter, vol. 3(3), pages 1-21, September.
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    5. Rossiter, Adriana & Dresner, Martin, 2004. "The impact of the September 11th security fee and passenger wait time on traffic diversion and highway fatalities," Journal of Air Transport Management, Elsevier, vol. 10(4), pages 225-230.
    6. Viscusi, W Kip & Zeckhauser, Richard J, 2003. "Sacrificing Civil Liberties to Reduce Terrorism Risks," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 99-120, March-May.
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    Cited by:

    1. Kevin Boyle & Sapna Kaul & Ali Hashemi & Xiaoshu Li, 2015. "Applicability of benefit transfers for evaluation of homeland security counterterrorism measures," Chapters, in: Carol Mansfield & V. K. Smith (ed.), Benefit–Cost Analyses for Security Policies, chapter 10, pages 225-253, Edward Elgar Publishing.
    2. Anthony M. Barrett, 2010. "Cost Effectiveness of On-Site Chlorine Generation for Chlorine Truck Attack Prevention," Decision Analysis, INFORMS, vol. 7(4), pages 366-377, December.
    3. Mark G. Stewart & John Mueller, 2013. "Terrorism Risks and Cost‐Benefit Analysis of Aviation Security," Risk Analysis, John Wiley & Sons, vol. 33(5), pages 893-908, May.

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