Estimating the Economic Impacts of WMD Attacks

American anti-terrorism policy needs risk assessment (chapter 7) to deploy U.S. scientific and technical assets more efficiently. But while the costs of various countermeasures are usually known, their benefits hinge on the losses that could be prevented. Improved analysis will require a better understanding of the short-term economic impacts of various real and hypothetical events. Can these losses be estimated? Here we review the growing social science and policy analysis literature that attempts to apply and extend existing economic analysis tools to terrorist attacks. Although the results of these studies are not detailed forecasts, they do provide first-order estimates of possible losses and provide a basis for comparing likely losses from different attacks.