The Role of Behavioral Responses in the Total Economic Consequences of Terrorist Attacks on U.S. Air Travel Targets

Abstract

U.S. airports and airliners are prime terrorist targets. Not only do the facilities and equipment represent high-value assets, but the fear and dread that is spread by such attacks can have tremendous effects on the U.S. economy. This article presents the methodology, data, and estimates of the macroeconomic impacts stemming from behavioral responses to a simulated terrorist attack on a U.S. airport and on a domestic airliner. The analysis is based on risk-perception surveys of these two scenarios. The responses relate to reduced demand for airline travel, shifts to other modes, spending on nontravel items, and savings of potential travel expenditures by U.S. resident passengers considering flying domestic routes. We translate these responses to individual spending categories and feed these direct impact results into a computable general equilibrium (CGE) model of the U.S. economy to ascertain the indirect and total impacts on both the airline industry and the economy as a whole. Overall, the estimated impacts on GDP of both types of attacks exceed $10B. We find that the behavioral economic impacts are almost an order of magnitude higher than the ordinary business interruption impacts for the airliner attack and nearly two orders of magnitude higher for the airport attack. The results are robust to sensitivity tests on the travel behavior of U.S. residents in response to terrorism.

A Value Measure for Public‐Sector Enterprise Risk Management: A TSA Case Study

“…Although taking no risk intervention action is an alternative, the nature of the risk events confronting a government organization could make such a decision politically unacceptable. In addition, should the risk event occur, the overall societal impact could be greater, as noted in recent research into behavioral responses to terrorist attacks against commercial aviation . These outcomes reinforce the importance of managers considering the whole distribution versus perceptions of negative consequences, and the need for sound analysis and transparent assumptions.…”

“…In addition, should the risk event occur, the overall societal impact could be greater, as noted in recent research into behavioral responses to terrorist attacks against commercial aviation. (22) These outcomes reinforce the importance of managers considering the whole distribution versus perceptions of negative consequences, and the need for sound analysis and transparent assumptions. The use of a value measure enables the use of several insightful analyses, such as stochastic dominance arguments and certainty calculations, that would not be feasible using a traditional multiattribute utility approach.…”

“…These industry impacts would total $8.16 billion. The economic impact on society is estimated as a mean of $13.1 billion, (22) but could be as low as $3.62 billion or as high as $20.83 billion. The 394 million enplanements that waited an average of 10 minutes less to process through security add a social benefit for reduced passenger delays of $1.65 billion.…”

Insights for Critical Alarm-Based Warning Systems from a Risk Analysis of Commercial Aviation Passenger Screening

“…Because these indirect losses depend heavily on the context of the attack, they are much more difficult to estimate. Several studies suggest that indirect impacts can be one or two orders of magnitude larger than direct impacts (Burns and Slovic 2007;Giesecke et al 2012Giesecke et al , 2015Rose et al 2016) and hence become an important consideration when planning security measures. Direct impacts are well understood, but indirect impacts are not.…”

“…We draw upon a study (Rose et al 2016) sponsored by the TSA to provide the indirect estimates we need. This study involved a longitudinal experiment that provided survey inputs to a national computable generalized equilibrium (CGE) economic model that estimated the indirect effects of an attack.…”