The September 11, 2001 terrorism attack on the United States has led
government officials to rethink anti-terrorism policies and researchers
to assess the implications for the study of risk and uncertainty. This
book draws on the expertise of eminent researchers in several
risk-related fields to assess three substantive areas of concern - risk
beliefs, insurance market effects, and policy responses.
The risk belief analyses consider several key questions. How do people
think about the risks of terrorism? What are their attitudes toward
these risks? To what extent are these low probability and highly
dramatic risks overestimated?
Several chapters present original survey results analyzing these
different aspects of terrorism risk assessments. These studies also
begin to explore how people might be willing to sacrifice civil
liberties to reduce the risk of terrorism and whether perceived
terrorism risks are affected by the severity of the outcome and by
proximity to past terrorist attacks.
The insurance industry incurred financial losses generated by the
terrorism attack. The risks had not been foreseen and were not reflected
in insurance pricing. These new terrorism risks generated considerable
uncertainty for insurance markets, leading to insurance stock price
declines that are documented in this book. Subsequently, a stock price
rebound occurred, particularly for the higher quality firms.
A third pair of essays deals with policy responses to terrorism risks. A
central theme of these analyses is that protective actions by one party
have fundamental effects on the risks posed to others. Making airlines
immune to terrorist attack may shift the terrorism attacks elsewhere,
diminishing the net improvement in security. The papers included here
examine how resources should be targeted given these offsetting effects.
Contributors to this volume include J. David Cummins, Neil A. Doherty,
Baruch Fischhoff, Geoffrey Heal, Howard Kunreuther, Cass R. Sunstein, W.
Kip Viscusi, and Richard J. Zeckhauser, among others.
