Cost-benefit assessment of United States homeland security

The increase in Federal United States homeland security expenditure since 2001 is approximately $31.4 billion per year. An assessment of expected lives saved as a result of such enhanced expenditure suggests that some 4000 lives per year would have to be saved in order to justify the increases expenditures, and that the cost per life saved ranges from $63 million to $630 million per life saved, greatly in excess of the regulatory safety goal of $7.5 million per life saved. As such, it clearly fails a cost-benefit analysis. If property damage and indirect economic costs are added to the cost of fatalities, then several large scale terrorist attacks would need to be foiled each year for increased homeland security to be cost effective. In addition, the opportunity cost of these increased expenditures is considerable, and it is highly likely that far more lives would have been saved if the money (or even a portion of it) had been invested instead in a wide range of more cost-effective risk mitigation programs. The wider costs of the reaction to terrorism are also discussed.