I’ve spent the day at a workshop on benefit-cost analysis where a lot of discussion is on valuing policies that reduce risks to life of various kinds. US policy, for better or worse, is focused on the idea of Value of a Statistical Life. Typically a policy that reduces risks of death will be approved if the cost per life saved is below $5million, and not otherwise. (There are similar numbers applied to publicly funded health care services, prescription drugs and so on, usually per year of life saved).
A striking thing I found out is that anti-terrorism policies of the Department of Homeland Security are subject to the same benefit-cost requirements as EPA and Transport. But Homeland Security is only one way the US government spends money with the aim of protecting Americans against attacks from terrorists and other enemies. Defense spending is far bigger and not subject to BCA, even though money spent on defense is money that can’t be spent on reducing terrorism risk through DHS or more reliably on reductions in environmental, health and transport risk The numbers are quite striking. The ‘peacetime’ defense budget is around $500 billion a year, and the various wars of choice have cost around $250 billion a year for the last decade (very round numbers here). Allocated to domestic risk reduction, that money would save 150 000 American lives a year. So, since 9/11, US defense spending has been chosen in preference to measures that would have saved 1.5 million American lives. That’s not a hypothetical number – it’s 1.5 million people who are now dead but who could have been saved. I think its fair to say that those people were killed by the Defense Department, or, more precisely, by the allocation of scarce life-saving resources to that Department.What can be said that might suggest that the defense budget didn’t really cost all those lives.? Some objections can be dismissed fast. First, a lot of people are uncomfortable with notions like valuing statistical lives. But there’s no need to believe in this notion as far as the argument here is concerned. What matters is that there are lots of policy options that would save lives at a cost of around $5 million each, and those options are not being taken up. Second, there are various responses that amount to the claim taht refusing to do things that would reduce death risks is, in some important moral sense, different from doing things that increase death risks. Avoiding the statistical aspect, not saving people when you could do so is morally different from kiling them.[1] I can’t formulate these claims sensibly enough to refute them, but that doesn’t stop people making them. More seriously, it’s not really plausible to think of eliminating defense spending altogether. But if the US spent 2 per cent of GDP like other rich countries (around $250 billion a year) and didn’t engage in wars of choice, it could have saved a million US lives over the past decade. A still more serious objection is that money saved on defense wouldn’t be used to save lives anyway. A couple of responses to this. First, even if the money was just handed back in tax cuts, around 15 per cent would probably be allocated to health care and more to things like education that are positively correlated with health status. Rounding to 20 per cent, that would still have saved something like 100 000 lives over a decade. Second, saving American lives is much more expensive than saving lives in poor countries. US military interventions are usually presented as being, at least in part, a kind of foreign aid. But civilian foreign aid can save lives at a much lower cost, perhaps 100 times lower. After deducting various forms of quasi military aid the US currently spends around $10 billion a year on development aid. Diverting 2 per cent of regular defense spending would allow that to be doubled, and could save something like a million lives a year.
fn1. As Clough put it “Thou shalt not kill, but needst not strive, officiously to keep alive”.
John Quiggin 
Does this cost benefit analysis consider the protection of property as in the entire nation from attack? The World Trade center’s destruction and the subsequent turmoil in financial markets is only one example from just one small group of attackers, what would be the cost of a full scale attack on the US?
Sure that sounds like an unimaginable event today but that’s because of the enormity of the US military, would that still be the case if the military was only the size of Australia’s?
What about the utility American’s get from the National Pride flowing from their super power status or what about the positive externalities that their allies such as Australia enjoy by freeriding?
My point is not to disagree with the article but just to raise the possibility that a cost/benefit analysis of something that has such broad benefits is incredibly difficult and could quite easily lead to the wrong conclusions.
@Joe
The point is that spending as much as the rest of the world combined is not necessary for the defence of any country no matter how paranoid and fearful that country’s citizens happen to be. The surprising destruction of the World Trade Centre, which had been designed to be hit by airliners, was an act of terrorism, carried out by terrorists. Dramatic as it was that was all it was. Not an ‘attack on the US’, just a terrorist act by terrorists. Turning the whole thing into a war, as in “War on Terror” was simply political hyperbole, resulting in dangerous thinking that has created the costly mess with a much greater terrorist threat that we have today. Of course, worked out fine for the military-industrial complex which had groped around for a credible threat after the big bad soviets ceased to exist. Now, US government expenditure on defence will continue unabated, even as the country itself collapses under a mountain of debt. “Mission Accomplished” as some American intellect once said.
The ‘utility’ perverse Americans may get from ‘national pride’ and fantasies of world domination is more than offset by the disutility the rest of the world suffers from a belligerent failed state that has demonstrated no respect for international law, human rights, and other nations, being so heavily armed.
The point about the attack on the WTC is that however dreadful it was — and it was a very serious criminal act — the only responses that were warranted were those that had a plausible prospect of
a) preventing similar attacks in the future
and/or
b) bringing the perpetrators to justice
subject to tests of proportionality, non-injury to non-combatants and so forth. At least, if policy were based on reason and evidence, that is how one would go about assessing the possible responses.
Plainly, waging an open-ended non-specific series of armed conflicts against remote enemies would not and could not meet such tests and was certain to have many deleterious impacts, not merely on non-combatants but on interests even the US normally regards as valuable.
The misnamed WoT prejudiced the safety of every apparent westerner abroad in western Asia and the Middle East and as we saw, in parts of Europe as well. It has been massively dispruptive to air travel and expenditure on internal security has increased massively, with all that implies for the much vauinted liberties of Americans (and others). It cost the US a fortune and led the US to strengthen the position of Iran. It entailed a massive and pernicious diversion of US funds into destructive expenditure, prolonged the political life of the Bush administration and hobbled the Obama administration after it and has so far claimed the lives of about 4000 US servicemen and ruined the lives of at least 20,000 others (not including their family and friends). In the end, the US will be forced to abandon it on terms much worse than if they’d not started it in the first place. Oh … and something like 30,000 Pakistanis, perhaps 1 million Iraqis and who knows how many Afghanis have been killed.
The prospect of an Israeli-Palestinina settlement have been set back with all that implies.
That’s what happens when instead of having a policy based on reason and evidence, you have one based on populism and wag the dog and pork-barrelling military contractors.
I think it is very likely that this policy has ruined the lives of 1 million Americans, however many have had them shortened based on claclulations of utility. Indeed, if only 1 million Americans since 2001 were worse off, I’d be very surprised indeed.
Frankly, it seems reasonable to assume that the bottom three quintiles at least have all been seriously harmed (directly or indirectly) and that outside the US the damage is also very widespread. This utterly dwarfs 9/11’s direct impact.
But Dick Cheney made lots of money from his Haliburton shares, as did lots of his friends, so it was all worthwhile!