July 24, 2005EconomySecurity

How people respond to terrorist attacks

Investment in courage is a fixed cost

This is an archived blog post from The Acorn.

The Economist features a study by Gary Becker and Yona Rubinstein on the rational response to terrorist attacks. They observe that while terrorist attacks do not quite deter regular bus passengers and cafe-goers from their usual routine, they cause their more casual counterparts to drop their trips and cups. In their paper, Becker and Rubinstein explain why.

Fear of terrorism may or may not be irrational. But it is not irresistible, Mr Becker and Ms Rubinstein conclude. With some effort, people can overcome their fear, but they will do so only if it is worth their while. For the dedicated patron of coffee shops, it is worth conquering their qualms, since the effort pays off every time they enjoy their favourite haunts. For the casual user, it is not. The threat of terrorism spoils something they only enjoyed on occasion anyway. Likewise, for someone who takes the bus twice a day, overcoming a fear of terrorism is an “investment” well worth undertaking.

The behaviour of bus riders and café customers suggests that this investment in courage is a fixed cost, not a variable one. People do not fight their fear each time they step on a bus; they choose to overcome it once and for all, or not at all. Once a person has come to terms with terror, it makes little difference to him whether he gets on a bus twice a day or once a day. He may be subjecting himself to a slightly higher risk of actual attack, but he is not adding anything to his fear of such a catastrophe. And it seems to be the fear, not the risk, that sways people. [The Economist subscription required]Related Post: Hatred creates demand for terrorism, concludes Silviu Dochia.



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