Terrorism Assumptions

Total Impact of a Terrorist Attack: The New York Times estimates that the property damage and economic costs of the 9/11 terrorist attacks totaled $178 billion. We will bump this up to $250 billion to plan for the worst case, non-nuclear scenario.

Lives Lost in a Terrorist Attack: 9/11 killed 2,996 people. We assume another terrorist attack of similar scale could kill 4,000 in a worst case scenario.

Monetary Value of a Life: Valuing a life might seem callous at first, but it is essential when considering investments that make impacts on life and death. The EPA values a human life at $9.1 million while the FDA measures it at $7.9 million. We round the lower value down to get our $7 million figure.

Cost to Prevent: The White House requested $50.9 billion to fight wars against radical groups overseas, in 2016. Since wars abroad are meant to disrupt terrorist groups, and thereby reduce their ability to stage large-scale attacks, we can attribute this budget toward preventing a 9/11-style attack. If you'd like to add in remaining counter-terrorism budget, this study places the cost of homeland defense in the decade after 9/11 at $690 billion. This yields an annual cost of $69 billion. We will use the $50.9 billion figure which only includes overseas conflicts. If you'd like to include law enforcement and intelligence costs, the figure would be $119.9 billion, annually.

Annual Chance of Attack without Detterrent: Statisticians have estimated that there was an 11-35% chance of a 9/11 style attack in the last 40 years. We will use the high-end, 35% estimate, which yields a 1.07% chance annually.

Annual Chance of Attack with Deterrent: According to the Global Terrorism Database, terrorist attack in the United States between 1975-2001 were 3.5 times more frequent than post-9/11. Since post-9/11 is when counter-terrorism spending increased significantly, we might assume that it is responsible for this shift. Dividing our 1.07% chance of a 9/11-style attack by 3.5 yields a .31% chance, today.

Alternative Investment Return: The ROI for non-military, public spending is hard to pin down. But studies have indicated it is likely between 5-10%. The Office of Management and Budget recommends a 7% discount rate. We will follow their recommendation.

Inflation Rate: The long-run, defense-specific inflation rate is 4.25%, going back to 1970.