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 10 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.