Difference between revisions of "The economics of terrorist behaviour"

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Economic theory is useful to explain the (i) behaviour of the terrorist, (ii) the causes of terrorism, (iii) and the dynamic interaction between terrorism and counter-terrorism. In general, the economics of terrorist behaviour is closely linked to the [#_Economic_tools_1 economics of criminal behaviour]. == Rational economic behaviour of terrorists ==Economic theory assumes that terrorists behave like a [#_Homo_economicus homo economicus]. According to Sandler and Enders (2004)<ref name="ftn70"> Source: Sandler, T. and W. Enders (2004). An Economic perspective on Transnational Terrorism. European Journal of Political Economy 20(2): 301-316. In: Schneider, F., T. Brück and D. Meierrieks (2009). ''The Economics of Terrorism and Counter-Terrorism: A Survey''.</ref>, terrorists commit terrorist actions as rational actors in order to obtain their tactical and strategic goals, and in this way maximize their [#_Utility utility]. According to e.g. Frey and Lüchinger (2004)<ref name="ftn71"> Frey, B. S., and S. Lüchinger (2004). Decentralization as a disincentive for terror. European Journal of Political Economy No.20 p. 509-515.</ref>, the linked costs descend from the use of resources and to the opportunity costs of violent behaviour (e.a., the possibility to reach the strategic goals in other, less violent, ways). Hence, the implementation of security measures will increase the costs of a terrorist, while, for example, a growing dissatisfaction among a certain ethnic group will decrease the opportunity costs of, increasing the use of violent behaviour. An illustration:<nowiki>“Within this [economic] framework, even suicide bombers have been modelled as rational agents: at the most basis, suicide bombers value the choice of “life in paradise” and worship as martyr higher than their present life. Staying alive, in fact, may not only imply foregoing paradise, but also loosing group solidarity in real life (Wintrobe 2001).”</nowiki><ref name="ftn72"> Schneider, F., T. Brück, and Karaisl, M. (2008). ''A survey of the Economics of Security''. Economics of Security Working Paper 1.</ref>== Economic causes of terrorism ==In general, roots of terrorism can be found in certain poor or unfavourable conditions which result into terrorism. The central question is whether these “roots” can be found in economic factors (e.g. poverty), political factors (e.g., repression) or social factors (e.g. religious, ethnic, geography). According to Schneider ''et al''. (2008), this question is of great relevance for counter-terrorism, e.g., to know what kind of preventive measures should be implemented (focussed on economics or political development). Some of the economic factors that could cause terrorism, are:# '''Relative economic deprivation''' is according to some scholars a cause of terrorism because it manifests itself in poverty, income inequality and a lack of economic opportunities. Economic deprivation, in turn, makes it easier for terrorist organizations to recruit frustrated followers.<ref name="ftn73"> Ibid.<br/> </ref># Another economic factor of importance is '''socio-economic change''', fostered by the process of modernization, creating different types of strain (e.g, Western ideologies) and new forms of living (e.g. shift from agricultural to urban societies)<ref name="ftn74"> Ibid.<br/> </ref>. According to Robison ''et al''. (2006)<ref name="ftn75"> Robinson, K.K, E.M. Crenshaw and J.C. Jenkins (2006). Ideologies of Violence: The Social Origins of Islamist and Leftist Transnational Terrorism. Social Forces 84(4): 129-145. In: Schneider, F., T. Brück and D. Meierrieks (2009). ''The Economics of Terrorism and Counter-Terrorism: A Survey''.<br/> </ref>, all of these factors create grievances associated with “economic, demographic or social strain”. Terrorist organizations are able to capitalize on these grievances of ‘modernization losers’ on the one hand, and on the other hand, are able to disseminate their opinions more effectively using the modern means of communication and transportation (Ross, 1993<ref name="ftn76"> Ross, J.I (1993). Structural Causes of Oppositional Political Terrorism: Towards a Causal Model. Journal of Peace Research 30(3): p.317-329. In: Ibid.<br/> </ref>).# The '''economic and political integration''' is sometimes regarded as a cause of terrorism. “Here, foreign policy, alliance structures and foreign dominance (Western or US supremacy), may incite terrorist activity ( Bergesen and Lizardo, 2004<ref name="ftn77"> Bergesen, A.J and O. Lizardo (2004). International Terrorism and the World-System. Sociological Theory 22(1): p.38-52 In: Ibid.<br/> </ref>)”. For example, Palestine terrorist activity in Europe is triggered by the Israeli-Palestine conflict.Other discussed factors that cause terrorism are the political and institutional order, political transformation and instability, civilization clashes and finally, contagion in time and geographically<ref name="ftn78"> See Schneider, F., T. Brück, and Karaisl, M. (2008). ''A survey of the Economics of Security''. Economics of Security Working Paper 1. p.15-19.</ref>.== Dynamic interaction between terrorism and counter-terrorism ==As illustrated above, there are many studies available which provide overviews of the impacts of terrorism and what causes it. However, according to Schneider ''et al''. (2009)<ref name="ftn79"> Source: Schneider, F., T. Brück and D. Meierrieks (2009). ''The Economics of Terrorism and Counter-Terrorism: A Survey''.</ref>, these studies do not differentiate between the various (temporal) stages of terrorist events and their repercussions. The authors distinguish three phases:# The direct short-run response triggered by the terrorist event itself (including the primary economic impacts);# the medium- to long-term responses induced by fear and resulting in security measures by public and private agents;# the reactions by terrorists in responds to both previous phases.According to Schneider ''et al''. (2009), most of the studies attribute the dynamics of terrorism and its repercussions to the terrorist event itself, but the authors point to the fact that the extent of secondary impacts of terrorism is determined to a large extent by the reactions of targets, rather than the terrorist events themselves. As a result, the authors refer to Endlers and Sandler (2006)<ref name="ftn80"> Endlers, W. and T. Sandler (2006). The political economy of terrorism. Cambridge, Cambridge University Press. Quoted in: Schneider, F., T. Brück, and Karaisl, M. (2008). ''A survey of the Economics of Security''. Economics of Security Working Paper 1</ref>, suggesting that security agents fail to take the full dynamic costs into consideration while implementing security measures<ref name="ftn81"> Source: Schneider, F., T. Brück, and Karaisl, M. (2008). ''A survey of the Economics of Security''. Economics of Security Working Paper 1. </ref>.Overall, Schneider ''et al''. (2009) conclude that, in fact, terrorism, even if it has not become more frequent, has already and will increasingly
  
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[[File:ae.png|25px|right|This is a page providing background in a specific field of expertise]]The '''economics of terrorist behaviour''' deals with the effect of incentives on terrorist behaviour and the possible measures to reduce terrorism. Economic models not only predict and explain the behaviour of terrorists, but can also be used to describe the causes of terrorism and the dynamic interaction with anti-terrorism measures.
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Insight in the impact of incentives on criminal and terrorist behaviour is of major relevance for urban planners since criminals and terrorists will most likely alter their behaviour in reaction to taken security measures in order to fulfil their goals.
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== Rational economic behaviour of terrorists ==
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Economic theory assumes that terrorists behave like rational economic agents<ref>A rational economic agent is an agent with clear preferences, who models uncertainty via expected values, and "always chooses to perform the action that results in the optimal outcome for itself from among all feasible actions". Source: Wikipedia. Online: http://en.wikipedia.org/wiki/Rational_agent. A rational agent is also referred to as the ''Homo Economicus''.</ref>. According to Sandler and Enders (2004)<ref name="ftn70"> Sandler, T. and W. Enders (2004): An Economic perspective on Transnational Terrorism. European Journal of Political Economy 20(2): 301-316. In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.</ref>, terrorists commit terrorist actions as rational actors in order to obtain their tactical and strategic goals, and in this way maximise utility<ref>Utility is a representation of preferences over some set of goods and services. Source: Wikipedia Online: http://en.wikipedia.org/wiki/Utility.</ref>. According to e.g. the economists Frey and Lüchinger (2004)<ref name="ftn71"> Frey, B. S., and S. Lüchinger (2004): Decentralisation as a disincentive for terror. European Journal of Political Economy No.20 p. 509-515.</ref>, the linked cost descend from the use of resources and to the [[Opportunity cost|opportunity cost]] of violent behaviour (e.a., the possibility to reach the strategic goals in other, less violent, ways). Hence, the implementation of security measures will increase the cost of a terrorist, while, for example, a growing dissatisfaction among a certain ethnic group will decrease the opportunity cost of, increasing the use of violent behaviour. An illustration:
  +
Within this [economic] framework, even suicide bombers have been modelled as rational agents: at the most basis, suicide bombers value the choice of "life in paradise" and worship as martyr higher than their present life. Staying alive, in fact, may not only imply foregoing paradise, but also loosing group solidarity in real life (Wintrobe 2001).<ref name=Schneider> Schneider, F., T. Brück, and Karaisl, M. (2008): A survey of the Economics of Security. Economics of Security Working Paper 1.</ref>
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[[File:Number of Terrorist Incidents.png|thumb|Number of Terrorist Incidents]]
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=== Socio-economic causes of terrorism ===
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In general, roots of terrorism can be found in certain poor or unfavourable conditions which result into terrorism. The central question is whether these "roots" can be found in economic factors (e.g. poverty), political factors (e.g., repression) or social factors (e.g. religious, ethnic, geography). According to Schneider ''et al'' (2008)<ref name=Schneider></ref>, this question is of great relevance for counter-terrorism, e.g., to know what kind of preventive measures should be implemented (focussed on economics or political development). Some of the economic factors that could cause terrorism, are:
  +
# '''Relative economic deprivation''' is according to some scholars a cause of terrorism because it manifests itself in poverty, income inequality and a lack of economic opportunities. Economic deprivation, in turn, makes it easier for terrorist organisations to recruit frustrated followers.<ref name=Schneider></ref>
  +
# Another economic factor of importance is '''socio-economic change''', fostered by the process of modernisation, creating different types of strain (e.g, Western ideologies) and new forms of living (e.g. shift from agricultural to urban societies)<ref name=Schneider></ref>. According to Robison ''et al'' (2006)<ref name="ftn75"> Robinson, K.K, E.M. Crenshaw and J.C. Jenkins (2006): Ideologies of Violence: The Social Origins of Islamist and Leftist Transnational Terrorism. Social Forces 84(4): 129-145. In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey</ref>, all of these factors create grievances associated with economic, demographic or social strain. Terrorist organisations are able to capitalise on these grievances of ˜modernisation losers" on the one hand, and on the other hand, are able to disseminate their opinions more effectively using the modern means of communication and transportation (Ross, 1993<ref name="ftn76"> Ross, J.I (1993): Structural Causes of Oppositional Political Terrorism: Towards a Causal Model. Journal of Peace Research 30(3): p.317-329. In:Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.</ref>).
  +
# The '''economic and political integration''' is sometimes regarded as a cause of terrorism. Here, foreign policy, alliance structures and foreign dominance (Western or US supremacy), may incite terrorist activity ( Bergesen and Lizardo, 2004<ref name="ftn77"> Bergesen, A.J and O. Lizardo (2004): International Terrorism and the World-System. Sociological Theory 22(1): p.38-52 In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey</ref>). For example, Palestine terrorist activity in Europe is triggered by the Israeli-Palestine conflict.
  +
  +
Other discussed factors that cause terrorism are the political and institutional order, political transformation and instability, civilisation clashes and finally, contagion in time and geographically<ref name=Schneider></ref>.
  +
  +
=== Dynamic interaction between terrorism and counter-terrorism ===
  +
As illustrated above, there are many studies available which provide overviews of the impacts of terrorism and what causes it. However, according to Schneider ''et al''. (2009)<ref name="ftn79"> Source: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.</ref>, these studies do not differentiate between the various (temporal) stages of terrorist events and their repercussions. The authors distinguish three phases:
  +
# The direct short-run response triggered by the terrorist event itself (including the primary economic impacts);
  +
# the medium- to long-term responses induced by fear and resulting in security measures by public and private agents;
  +
# the reactions by terrorists in responds to both previous phases.
  +
  +
According to Schneider ''et al''. (2009), most of the studies attribute the dynamics of terrorism and its repercussions to the terrorist event itself, but the authors point to the fact that the extent of secondary impacts of terrorism is determined to a large extent by the reactions of targets, rather than the terrorist events themselves. As a result, the authors refer to Endlers and Sandler (2006)<ref name="ftn80"> Endlers, W. and T. Sandler (2006): The political economy of terrorism. Cambridge, Cambridge University Press. Quoted in: Schneider, F., T. Brück, and Karaisl, M. (2008): A survey of the Economics of Security. Economics of Security Working Paper 1</ref>, suggesting that security agents fail to take the full dynamic costs into consideration while implementing security measures<ref name=Schneider></ref>.Overall, Schneider ''et al''. (2009) conclude that, in fact, terrorism, even if it has not become more frequent, has already and will increasingly
 
*become more severe,
  
*become more severe,
 
*shift location towards places with relatively less security measures in place, such as the Middle East and Asia, and
  
*shift location towards places with relatively less security measures in place, such as the Middle East and Asia, and
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*has adapted its strategies and organizational structures to evade proactive policiersâ.
+
*has adapted its strategies and organisational structures to evade proactive policies.
  +
⚫
An example::The high number of airplane hijackings in the 1970s caused airports to increase their use of metal detectors, therefore increasing the relative cost of hijackings for terrorists. As a result, terrorists switched from hijackings to kidnappings. The high number of kidnappings caused governments to increase security measures for foreign diplomats, so terrorists replaced kidnappings with suicide bombings.” (Chlebik, K., 2010)<ref name="ftn82"> Chlebik, K. (2010). ''Terrorism and Game Theory: From the Terrorists’ Point of View''. Pepperdine Policy Review: Vol. 3, Article 3.</ref>.
  
  +
An example:
  ⚫
:The high number of airplane hijackings in the 1970s caused airports to increase their use of metal detectors, therefore increasing the relative cost of hijackings for terrorists. As a result, terrorists switched from hijackings to kidnappings. The high number of kidnappings caused governments to increase security measures for foreign diplomats, so terrorists replaced kidnappings with suicide bombings. (Chlebik, K., 2010)<ref name="ftn82"> Chlebik, K. (2010): Terrorism and Game Theory: From the Terrorists' Point of View. Pepperdine Policy Review: Vol. 3, Article 3.</ref>.
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  ⚫
Yet, although economic literature suggests that the ˜relative price" of terrorist activities is a critical determinant of terrorist behaviour, there are other critical determinants such as the motivation of terrorists from a psychological point of view, or a legal point of view<ref name="ftn83"> See, for example: Phillips, P.J., and G. Pohl (2011): Terrorism, Identity, Psychology and Defence Economics. International Research Journal of Finance and Economics. Issue 77. EuroJournals Publishing.</ref>. Terrorist leaders, for instance, are more likely to circumvent security measures than terrorist recruits due to their intrinsic motivation.
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==Related subjects==
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*[[Economic|Economic main page]]
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*[[Economic impact]]
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**[[Economic impact of urban planning|Economic impact of urban planning]]
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**[[Economic impact of security threats]]
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**[[Economic impact of security measures|Economic impact of security measures]]
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**[[The economics of criminal and terrorist behaviour|Economics of criminal and terrorist behaviour]]
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***[[The economics of crime|Economics of crime]]
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***Economics of terrorist behaviour
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*[[Economic tools]]
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*[[Economic output]]
   
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{{references}}
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Yet, although economic literature suggests that the ‘relative price’ of terrorist activities is a critical determinant of terrorist behaviour, there are other critical determinants such as the motivation of terrorists from a psychological point of view, or a legal point of view<ref name="ftn83"> See, for example:Phillips, P.J., and G. Pohl (2011''). Terrorism, Identity, Psychology and Defence Economics. International Research Journal of Finance and Economics''. Issue 77. EuroJournals Publishing.</ref>. Terrorist leaders, for instance, are more likely to circumvent security measures than terrorist recruits due to their intrinsic motivation.
  

Latest revision as of 12:30, 30 October 2013


This is a page providing background in a specific field of expertise

The economics of terrorist behaviour deals with the effect of incentives on terrorist behaviour and the possible measures to reduce terrorism. Economic models not only predict and explain the behaviour of terrorists, but can also be used to describe the causes of terrorism and the dynamic interaction with anti-terrorism measures.

Insight in the impact of incentives on criminal and terrorist behaviour is of major relevance for urban planners since criminals and terrorists will most likely alter their behaviour in reaction to taken security measures in order to fulfil their goals.

Rational economic behaviour of terrorists

Economic theory assumes that terrorists behave like rational economic agents[1]. According to Sandler and Enders (2004)[2], terrorists commit terrorist actions as rational actors in order to obtain their tactical and strategic goals, and in this way maximise utility[3]. According to e.g. the economists Frey and Lüchinger (2004)[4], the linked cost descend from the use of resources and to the opportunity cost of violent behaviour (e.a., the possibility to reach the strategic goals in other, less violent, ways). Hence, the implementation of security measures will increase the cost of a terrorist, while, for example, a growing dissatisfaction among a certain ethnic group will decrease the opportunity cost of, increasing the use of violent behaviour. An illustration: Within this [economic] framework, even suicide bombers have been modelled as rational agents: at the most basis, suicide bombers value the choice of "life in paradise" and worship as martyr higher than their present life. Staying alive, in fact, may not only imply foregoing paradise, but also loosing group solidarity in real life (Wintrobe 2001).[5]

Number of Terrorist Incidents

Socio-economic causes of terrorism

In general, roots of terrorism can be found in certain poor or unfavourable conditions which result into terrorism. The central question is whether these "roots" can be found in economic factors (e.g. poverty), political factors (e.g., repression) or social factors (e.g. religious, ethnic, geography). According to Schneider et al (2008)[5], this question is of great relevance for counter-terrorism, e.g., to know what kind of preventive measures should be implemented (focussed on economics or political development). Some of the economic factors that could cause terrorism, are:

  1. Relative economic deprivation is according to some scholars a cause of terrorism because it manifests itself in poverty, income inequality and a lack of economic opportunities. Economic deprivation, in turn, makes it easier for terrorist organisations to recruit frustrated followers.[5]
  2. Another economic factor of importance is socio-economic change, fostered by the process of modernisation, creating different types of strain (e.g, Western ideologies) and new forms of living (e.g. shift from agricultural to urban societies)[5]. According to Robison et al (2006)[6], all of these factors create grievances associated with economic, demographic or social strain. Terrorist organisations are able to capitalise on these grievances of ˜modernisation losers" on the one hand, and on the other hand, are able to disseminate their opinions more effectively using the modern means of communication and transportation (Ross, 1993[7]).
  3. The economic and political integration is sometimes regarded as a cause of terrorism. Here, foreign policy, alliance structures and foreign dominance (Western or US supremacy), may incite terrorist activity ( Bergesen and Lizardo, 2004[8]). For example, Palestine terrorist activity in Europe is triggered by the Israeli-Palestine conflict.

Other discussed factors that cause terrorism are the political and institutional order, political transformation and instability, civilisation clashes and finally, contagion in time and geographically[5].

Dynamic interaction between terrorism and counter-terrorism

As illustrated above, there are many studies available which provide overviews of the impacts of terrorism and what causes it. However, according to Schneider et al. (2009)[9], these studies do not differentiate between the various (temporal) stages of terrorist events and their repercussions. The authors distinguish three phases:

  1. The direct short-run response triggered by the terrorist event itself (including the primary economic impacts);
  2. the medium- to long-term responses induced by fear and resulting in security measures by public and private agents;
  3. the reactions by terrorists in responds to both previous phases.

According to Schneider et al. (2009), most of the studies attribute the dynamics of terrorism and its repercussions to the terrorist event itself, but the authors point to the fact that the extent of secondary impacts of terrorism is determined to a large extent by the reactions of targets, rather than the terrorist events themselves. As a result, the authors refer to Endlers and Sandler (2006)[10], suggesting that security agents fail to take the full dynamic costs into consideration while implementing security measures[5].Overall, Schneider et al. (2009) conclude that, in fact, terrorism, even if it has not become more frequent, has already and will increasingly

  • become more severe,
  • shift location towards places with relatively less security measures in place, such as the Middle East and Asia, and
  • has adapted its strategies and organisational structures to evade proactive policies.

An example:

The high number of airplane hijackings in the 1970s caused airports to increase their use of metal detectors, therefore increasing the relative cost of hijackings for terrorists. As a result, terrorists switched from hijackings to kidnappings. The high number of kidnappings caused governments to increase security measures for foreign diplomats, so terrorists replaced kidnappings with suicide bombings. (Chlebik, K., 2010)[11].

Yet, although economic literature suggests that the ˜relative price" of terrorist activities is a critical determinant of terrorist behaviour, there are other critical determinants such as the motivation of terrorists from a psychological point of view, or a legal point of view[12]. Terrorist leaders, for instance, are more likely to circumvent security measures than terrorist recruits due to their intrinsic motivation.

Related subjects

Footnotes and references

  1. ↑ A rational economic agent is an agent with clear preferences, who models uncertainty via expected values, and "always chooses to perform the action that results in the optimal outcome for itself from among all feasible actions". Source: Wikipedia. Online: http://en.wikipedia.org/wiki/Rational_agent. A rational agent is also referred to as the Homo Economicus.
  2. ↑ Sandler, T. and W. Enders (2004): An Economic perspective on Transnational Terrorism. European Journal of Political Economy 20(2): 301-316. In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.
  3. ↑ Utility is a representation of preferences over some set of goods and services. Source: Wikipedia Online: http://en.wikipedia.org/wiki/Utility.
  4. ↑ Frey, B. S., and S. Lüchinger (2004): Decentralisation as a disincentive for terror. European Journal of Political Economy No.20 p. 509-515.
  5. ↑ 5.0 5.1 5.2 5.3 5.4 5.5 Schneider, F., T. Brück, and Karaisl, M. (2008): A survey of the Economics of Security. Economics of Security Working Paper 1.
  6. ↑ Robinson, K.K, E.M. Crenshaw and J.C. Jenkins (2006): Ideologies of Violence: The Social Origins of Islamist and Leftist Transnational Terrorism. Social Forces 84(4): 129-145. In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey
  7. ↑ Ross, J.I (1993): Structural Causes of Oppositional Political Terrorism: Towards a Causal Model. Journal of Peace Research 30(3): p.317-329. In:Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.
  8. ↑ Bergesen, A.J and O. Lizardo (2004): International Terrorism and the World-System. Sociological Theory 22(1): p.38-52 In: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey
  9. ↑ Source: Schneider, F., T. Brück and D. Meierrieks (2009): The Economics of Terrorism and Counter-Terrorism: A Survey.
  10. ↑ Endlers, W. and T. Sandler (2006): The political economy of terrorism. Cambridge, Cambridge University Press. Quoted in: Schneider, F., T. Brück, and Karaisl, M. (2008): A survey of the Economics of Security. Economics of Security Working Paper 1
  11. ↑ Chlebik, K. (2010): Terrorism and Game Theory: From the Terrorists' Point of View. Pepperdine Policy Review: Vol. 3, Article 3.
  12. ↑ See, for example: Phillips, P.J., and G. Pohl (2011): Terrorism, Identity, Psychology and Defence Economics. International Research Journal of Finance and Economics. Issue 77. EuroJournals Publishing.
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