Although public concerns about intrusive screening of air passengers didn’t result in mass protests, as some feared, the matter is hardly settled. As a public policy issue, such questions are fundamentally economic in nature because they involve decisions about how our society can use scarce resources so as to best satisfy our needs and wants.
Such “resources” include the traveling public’s time as well as the Transportation Security Administration’s budget. “Satisfying our needs and wants” includes not only the positive outcome of safer flying and a more secure nation, but also the exasperation and lost dignity of air travelers.
These all are aspects of deciding on the optimal level of what economists call “public goods,” those goods or services that are of value to society as a whole that will not be created by free markets without the intervention of government. These are situations where, contrary to much popular myth, government can and does “create value.”
The fundamental problem in such situations is determining the value of the public good produced, since there are no market forces that determine a price, as with, say, chicken breasts or shoe polish. One can make fairly good estimates of the value produced by a flood-control project, but how does one compute the value of national defense?
The upshot is that the optimum levels of public goods such as aviation security get determined through the political process. Citizens communicate, through letters to editors or elected officials, votes, campaign contributions and public demonstrations how much they value aircraft carriers, highways or national parks versus lower taxes.
The brouhaha over invasive screening methods such as near-nude imaging or intimate pat-downs is an example of the process. The loss of privacy and dignity obviously is a cost of purportedly better screening. Many people apparently judge the additional cost greater than the additional benefit.
At this point it is important to note that al-Qaida has successfully pulled off the greatest “economy of force” operation in the history of human conflict. Using “economy of force” is one of the principles of war drummed into every young military officer. It describes operations where a small group of soldiers can tie up and even destroy and larger force. The 300 Spartans who held off thousands of Persians at Thermopylae was a classic “economy of force” operation.
The 9/11 attacks killed few people in comparison with common hazards such as drunken drivers. But the political, emotional and budgetary response has been enormous. Preventing similar attacks against buildings or even simply blowing up airplanes in flight is proving expensive. And the “opportunity costs,” the values of the indirect sacrifices we must make to achieve greater safety, such as lost travelers’ time, may be far larger than the direct budgetary cost of running the Transportation Security Administration.
The Department of Transportation lists some 715 million “Revenue Passenger Enplanements” for 2009. Assume that the additional security measures introduced after 9/11 add an extra hour to each such flight and that each passenger would be willing to pay $10 to avoid tedious standing in line, and you come up with $7.15 billion, near the 2010 TSA budget of $7.8 billion. Plug in your own estimates of average delays and the dollar value of time and you get lower or higher totals. Add dollar estimates of the loss of privacy — surveying people on what they would be willing to pay to avoid the unpleasant experience is a starting point — and you get an even higher total.
So we are spending $15 billion to $20 billion or more of direct and implicit costs to reduce terrorist-caused aviation harm.
The next question: “What is the value of damages avoided?” Obviously, if there was no screening of passengers or baggage at all, as before the 1970s, terrorists could have a heyday and deaths and property damage would be huge. But what if we went back to the measures in place before 9/11 or to those same measures with a few added tweaks that did not add greatly to overall travel times?
Estimating the higher level of deaths and property damage that we might experience with less-comprehensive security measures would require extensive assumptions on the part of security experts. And comparing the value of such additional harm to the costs saved would require placing a value on human life, something that many people find morally abhorrent.
Economists reply that we place an implicit value on life every time we decide to drive 60 mph instead of 50 or not get a tetanus shot because Medicare won’t reimburse the cost. The value of a human life is not zero. Nor is it infinite. Choosing within that range involves value judgments. But from a public policy point of view, the relevant question is how many lives we save for each additional $100 million of cost related to aviation security measures versus spending the same amount on public health, medical research or other life-extending programs.
Economists can muse about how to estimate not only the overall social costs and benefits of transportation security but also the more important changes in costs and benefits for discrete changes in either direction from the status quo. But we are likely to muddle along with policy driven by citizen expressions of resignation versus anger about having their private parts scanned or patted.
© 2010 Edward Lotterman
Chanarambie Consulting, Inc.