The Potential Cost of Terror

Often in the world of public policy we are asked to value things that do not have intrinsic monetary value: what is the value of seeing a sunset, what is the value of a safer car, or what is the value of knowing that the capital of Nevada is not Las Vegas. Now you can get some sleep in the air. With today’s announcement of the arrest of 21 24 alleged attempted airline bombing conspirators, harsh new security restrictions have been placed on carry-on baggage for flights between the US and the UK. These restrictions limit you to a wallet, keys, passport, tickets, glasses (but no case) and a small number of non-liquid medical items. This specifically means you cannot board the plane with a laptop, DVD player, iPod, or even a book. You can find a full list of banned items here.

The result is that for the six hour flight from JFK to Heathrow, you cannot read, listen to music, watch your own movies, or work. By getting caught, the terrorist fanatics have imposed a potentially very large cost on society without ever setting off one bomb. Without a doubt, the costs would have been larger had they succeeded, but even in failure, they have succeeded to some degree.

Let us look at some of the costs they have imposed. First the obvious: business travelers are able to do substantial amounts of work in the five hours of secluded laptop time they get on the flight. Now, with no laptops, pens, or paper, their ability to do work is severely curtailed. The second obvious cost is that the policing of these new restrictions requires additional staff, separate lines for US/UK flyers, and longer times waiting in line. In economics time has a huge cost because it is time you give up to do other things like sleep, visit with your family, and earn money. Now this time is waiting in line.

There are also costs to non-business travelers. That good book you were going to read is not going to get read. What is the value of your entertainment? People are willing to pay $20 to go see a two-hour movie with a date. People are willing to pay ten times that for a Broadway show. While the value of each person’s non-boredom varies, it will still add up to a significant amount for the entire plane. Now with nothing to do, you might be forced to talk to your neighbor. This may be a great thing if your neighbor is an interesting conversation partner, but you might be stuck next to Gomer Pyle for six hours too. How much would you pay to be reseated?

Of course, airlines might find new ways to entertain us. Maybe they will show more movies, distribute paper and pens so we can work, or start giving all our own little Sudoku books. Whatever they end up doing, you can be sure of one thing, it will raise their cost, and some portion of that increased cost is going to be reflected in your ticket price. So, when you fly to London in the next few weeks, you may think that you are going to do this, because, if you don’t, the terrorists will have won. The only problem is that the terrorists can have large victories even when they lose.