Valuing a Homeland Security Policy: Countermeasures for the Threats from Shoulder Mounted Missiles

This paper reports estimates for the ex ante tradeoffs for three specific homeland security policies that all address a terrorist attack on commercial aircraft with shoulder mounted missiles. Our analysis focuses on the willingness to pay for anti-missile laser jamming countermeasures mounted on commercial aircraft compared with two other policies as well as the prospect of remaining with the status quo. Our findings are based a stated preference conjoint survey conducted in 2006 and administered to a sample from Knowledge Networks' national internet panel. The estimates range from $100 to $220 annually per household. Von Winterfeldt and O'Sullivan's [2006] analysis of the same laser jamming plan suggests that the countermeasures would be preferred if economic losses are above $74 billion, the probability of attack is larger than 0.37 in ten years, and if the cost of the measures is less than about $14 billion. Our results imply that, using the most conservative of our estimates, a program with a cost consistent with their thresholds would yield significant aggregate net benefits. More generally, this research grows out of a need to measure the benefits of an iconic public good -- national defense -- to assess the economic efficiency of Department of Homeland Security policies.