Terrorist attack's economic costs

Terrorist attacks are horrifying and kill so many innocent lives; however, the costs of terrorist attacks are far more than killing and hurting innocent people. They have significantly high social costs including economic costs.

Firstly, the existence of terrorist attacks makes all the governments under terrorist threats have to have spent significant government funding to fight against terrorist attacks. Such use of resources is definitely going to occupy the uses of resources in other sectors: people are recruited from other sectors, including data analysis, money and equipment are taken from other fields as well. The returns of such use of resources mainly focus on the anti-terrorist field and such use of public resources has relatively limited multiple effects than government investment in other fields does. Secondly, terrorist attacks are almost black swan events that are non-computable (and other characteristics that black swan events have) and add more uncertainties to our individual lives and activities as well as business operations and other economic activities. Although when dealing with black swan events, we usually choose to ignore the effects of black swan events, once a terrorist attack occurs, it will cause an immediate damage to our society and terrorist attacks in the short term no longer are black swan events and based on the information released from intelligent agencies and other government parts, people are able to compute the risks of terrorist attacks and this immediately increases the short-term costs, as the possibility of terrorist attacks lowers the expected returns. Thirdly, terrorist attacks could increase the possibilities of social unrest and discrimination, the recent example is the US president's proposed migration ban. This also increases of our social costs.

Overall, the damage of terrorist attacks increases the costs of providing security and raises the social uncertainties.