Evaluating counterterrorism spending

In this article, we present a simple back-of-the-envelope approach for evaluating whether counterterrorism security measures reduce risk sufficiently to justify their costs. The approach uses only four variables: the consequences of a successful attack, the likelihood of a successful attack, the degree to which the security measure reduces risk, and the cost of the security measure. After measuring the cost of a counterterrorism measure, we explore a range of outcomes for the costs of terrorist attacks and a range of possible estimates for how much risk might be reduced by the measure. Then working from this mix of information and assumptions, we can calculate how many terrorist attacks (and of what size) would need to be averted to justify the cost of the counterterrorism measure in narrow cost-benefit terms. To illustrate this approach, we first apply it to the overall increases in domestic counterterrorism expenditures that have taken place since the terrorist attacks of September 11, 2001, and alternatively we apply it to just the FBI's counterterrorism efforts. We then evaluate evidence on the number and size of terrorist attacks that have actually been averted or might have been averted since 9/11.