The Cost and Extent of Terrorism in the U.S

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The analyses of the consequences and costs of any conflict are centered on either interstate or civil conflicts. However, the 9/11 terrorist attack has shown to intensify the interest concerning the costs of terrorism, a form of conflict and violence that is directed to civilians or noncombat who are generally not associated with a political object of the perpetrators. Though terrorism in the U.S may be perceived as a particular tactic applied in both external and internal conflicts, its costs have been separately studied. Direct costs of terrorism are those that have immediate losses related to the attack, including lost wages/layoffs, sustained injuries, destroyed goods, and reduced commerce. While most of the losses due to terrorism cause significant property damage and casualties, the indirect costs cause the highest cost. They are the subsequent terrorism losses, including higher insurances, increased compensation to victims and states affected, security costs, and expenses on counterterrorism. This essay explores the cost and extent of terrorism in the U.S.

The extent of terrorism in the U.S

The U.S has, for seventeen years, been at war in Afghanistan and fifteen years in Iraq. Subsequently, U.S has also far longer been active in Somalia, whereby it has spread operations in dealing with extremist and terrorist threats in a broad continuum of conflicts in South Asia, North Africa, sub-Saharan regions, and South East of Asia. In event after event, the U.S has shifted beyond counterterrorism to counterinsurgency as well as from momentary and small force of antiterrorism to constant military presence. According to Cordesman (2018), the line between counterinsurgency and counterterrorism has continuously shown to be so blurred that no significant difference can be depicted. Based on the fact that the database for terrorism events only date back in 1968, every study pattern regarding terrorism ought to commence in 1968 as well (Sandler, 2014). Reports assert that terrorism escalated from 1968 to around the mid-1980s, with almost 500 cases every year (Sandler, 2014). As Sandler (2014) highlights, the incidents fell from about 100 to 200 events every year since the mid-1990s, except for 1995 and 2001. The most comprehensive terrorist incident database, the Global Terrorism Database (GTD), was founded in the U.S and still maintained in the country. 

Combining this with the fact that U.S media extensively covers terrorist incidents than any other event, dated back in the 1970s, is a clear depiction that the country has the complete leading record of terrorism in recent decades (LaFree, 2010). The annual death toll resulting from terrorism in the U.S since 1970 showed a downward trend until the year 2001, where it raised to four times higher with approximately 3000 fatalities in the September 11 attack (LaFree, 2012). In recent history, the September 11 attack that hit New York stood out as the largest fatal terrorist case worldwide. LaFree and Dugan (2007) assert that, based on these fatalities, terrorism has been perceived to have been relatively higher in the 1970s, comparably slight in the following decades except for 1995 and 2001. Reports have brought out that for the past five years, U.S has had a small though a constantupsurgein terrorist fatalities. In most of the years, terrorism caused at most 50 casualtiesevery year, and in some of the years, no fatality occurred (LaFree and Dugan, 2007). With the 2001 attack exemption, terrorism accounts for less than 0.01% of the fatalities experiences every year in the U.S since 1970 as compared to 120 fatalities caused by road accidents every day in the country (Filigrana Villegas, 2019). Nevertheless, the costs of terrorism are still felt in the U.S.

Direct costs

Loss on human capital and economic output

The direct costs of terrorism are the loss of capital, both human and non-human. According to Tavor (2011), the estimated loss of capital (human and non-human) in the U.S range between $25 and $60 billion, which the physical resourcesamounts to 0.2% of the country’s economy and 0.06% of the U.S valuableresources or assets. The U.S has suffered a loss of its economic output due to terrorism. For instance, Navarro & Spencer (2001) found out that the country experienced a loss of $47 billion in its economic output and a loss of $1.7 trillion of its stock marketcapital. Nevertheless, the short-term impact on economic behavior uncertainties tends to vary based on the adept offsetting responses. 

Losses on industries 

Terrorism impacts specific industries and regions in the U.S that have been proved to be a substantial cost. Particularly, sectors like tourism, transport (airline and shipping, postal services, insurance industries, as well as any other related activities like lodging. For instance, exemplifying the September 11 terrorist attack, the Bureau of Labor Statistics found out that it caused job layoffs as well as separations. Data has shown that a minimum of 125,000 employees was laid off for not less than 30 days due to the attack (Keith, 2004). Keith (2004) explained that the figure underestimated the full extent of layoffs related to terrorism in the U.S, whereby it causes a layoff of at least 50 employees in over 30 days, excluding layoffs for smaller firms or lesser durations. Losses caused by terrorism on insurance industries in the U.S are estimated to range from $30 billion to $58 billion, whereby the primary uncertainty that is acquired from a reimbursement on liability insurance (Lenain, Bonturi& Koen, 2002). When Hurricane Andrew occurred in 1992 in Florida, it caused approximately $21 billion in insurance losses (Lenain, Bonturi& Koen, 2002). However, though Hurricane Andrew caused the biggest historical insurance event, the insured losses occurring from the terrorist attack on September 11 were even higher. That means some industries like the insurance sector may either be directly or indirectly impacted.

Indirect costs

Cost on military spending and security 

One indirect cost of terrorism in the U.S includes that on security, which is estimated to be equivalent to a terrorist tax. Becker (2001) found out that the long-term security and waiting costs for airlines tend to escalate the costs by approximately $11 billion every year (Ito & Lee, 2005). Therefore, constant terrorist costs in the country would add up to 11% of the air travel cost as well as impose approximately 0.1% economic cost of GDP.Additionally, terrorism has been reported to lower investment and subsequently lowering the capital stock, which results in almost 0.2% of the GDP in the long-term. Burke (2008) also estimated that the cost of terrorism on U.S business has escalated to as much as $151billion, which includes figures for insurance, logistics, travel, and transport, information technology, workplace security, and costs of employees. A study by Navarro and Spencer (2001) found out that terrorist tax added up to $41 billion, tallied from a microeconomic cost. Besides public spending on security, private security in the U.S has also shown to rise. Though there is limited data on the cost private sectors incur on security in the U.S, it is estimated to be approximately $40 billion every year (Lenain, Bonturi& Koen, 2002). Almost half of this spending comprises security guards, a single category, and protective service workers, while the rest is composed of computer security, surveillance cameras, guard dogs, and alarm systems. Lenain, Bonturi, and Koen (2002) brought out that this substantial amount compares to what the country spends on state, federal, and local police officers. Terrorism caused a constant increase of 1% of the GDP on military spending and an increment of 0.5% on the employment of the labor force by the U.S government (Lenain, Bonturi& Koen, 2002). The security spending of private sectors has also remained constant at o.5% of the GDP (Seidenstat, 2004). Therefore, one of the major costs of terrorist attacks in the U.S is felt on security and military expenses.

Government support for terrorist victims

The cost of terrorism extends to the government aid on victims. The U.S has established robust policies and laws to offer the victims of both state and federal crimes with obligatory rights and services in the justice process. Additionally, state and federal initiatives allow terrorist victims to acquire the reimbursement of expenses that are crime-related, for instance, treatment for psychological and physical injuries as well as burials. The state and federal agencies aid the terrorist victims throughout justice prices and assist them in accessing services such as counseling and referrals, compensation claims, travel, and lodging for witnesses outside the town and court proceeding information. An example of cost encountered in the aid is the $50 million set aside by the Office for Victims of Crime (OVC), U.S. Department of Justice from the CVF funds in the Antiterrorism Emergency Reserve (AER) (Sacco, Congressional Research Service & United States of America, 2016). AER funds programs administered by the OVC to support terrorism victims. International Terrorism Victim Expense Reimbursement Program incurs cost such as Medical expense amounts to $50,000, mental health up to $5,000 for one year, funeral or burial up to $25,000, property loss, repair, and replacement amounting to $10,000 and $15,000 for miscellaneous (OVC, n.d.).The reimbursements are dependent on the state; for instance, California has a set maximum compensation of $63,000 and $25,000 for Virginia (OVC, n.d.). The government reimburses terrorist victims for expenses not planned for in other resources like private insurances. This means that less resources are used for productivity enhancement.

Resource diversion towards counterterrorism 

The cost and consequences of terrorist events in the U.S is also measured from costs incurred in counterterrorism efforts. These include the resources diverted to anti-terror activities. The Council of Economic Advisers (CEA) contends that the U.S has increased spending on security, including armed forces, which is associated with slowing down economic growth. This is because more labor and capital are redirected to security production and, therefore, away from final demand production. According to Lenain, Bonturi, and Koen (2002), the terrorist cost approximately $20 billion (0.3%) of the GDP in non-farm sectors reduced the total U.S factor productivity in the year 2002 and a reduction of 0.3% in later years (Congressional Budget Office (CBO).  Diversion of resources towards counterterrorism is a hindrance to other more constructive project in the U.S such as health.


In conclusion, though the extent of terrorism in the U.S has shown to reduce since 1970, with an exemption of 1995 and 2001, the cost of terrorism has been substantial. For instance, the death toll has shown a downward trend since 1970, with the exemption of the 2001 attack, which raised the death toll to nearly four times that of 1970. However, the effect or costs of terrorism in the U.S are still felt in the current operation of the country though concentrated in very few sectors. The cost of terrorism in the U.S are either directly or indirectly felt. Though the direct costs of terrorism are devastating, the indirect costs of terrorism have been reported to cause a higher cost in the U.S. The direct costs are on human and non-human capital and to some extent related industries; particularly, in industries of tourism, food services, transportation through airline and shipping, financial markets and insurances. Government support for the victims is also a cost incurred, whereby a particular amount depending on the state is set aside for compensation of victims are and locations hit. Lastly, the U. undergoes a cost in counterterrorism, whereby it diverts the resources from more production projects to security activities like military forces



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