Researchers study costs of 'dirty bomb' attack in L.A.

Apr 23, 2012

A dirty bomb attack centered on downtown Los Angeles' financial district could severely impact the region's economy to the tune of nearly $16 billion, fueled primarily by psychological effects that could persist for a decade.

The study, published by a team of internationally recognized economists and decision scientists in the current issue of Analysis, monetized the effects of fear and and incorporated them into a state-of-the-art macroeconomic model.

"We decided to study a terrorist attack on Los Angeles not to scare people, but to alert policymakers just how large the impact of the public's reaction might be," said study co-author William Burns, a research scientist at Decision Research in Eugene, Ore. "This underscores the importance of risk communication before and after a to reduce ."

Economists most often focus on the immediate economic costs of a terrorist event, such as injuries, cleanup and business closures. In this scenario, those initial costs would total just over $1 billion.

"Terrorism can have a much larger impact than first believed," said study co-author Adam Rose, a research professor with the USC Price School of Public Policy and USC's Center for Risk and Economic Analysis of Terrorism Events (CREATE). "The of the public's change in behavior are 15 times more costly than the immediate damage in the wake of a disaster."

"These findings illustrate that because the costs of modern disasters are so large, even small changes in and behaviors may significantly affect the economic impact," said Rose, who has published economic estimates of the 9/11 attacks, the Northridge Earthquake and other major disasters.

To estimate how fear and risk perception ripple through the economy after a major terrorist event, the researchers surveyed 625 people nationwide after showing them a mock newspaper article and newscasts about the hypothetical attack to gauge the public's reticence to return to normal life in the financial district.

The study translated these survey results into estimates of what economic premiums would be put on wages and what discounts shoppers would likely require in the aftermath of a terrorist attack.

After six months, 41 percent of those surveyed said they would still not consider shopping or dining in the financial district. And, on average, employees would demand a 25 percent increase in wages to return to their jobs.

"The stigma generated by dirty bomb radiation could generate large changes in the perceived risk of doing business in the region," said co-author James Giesecke of the Centre of Policy Studies at Monash University. "However, with regional economies in competition with one another for customers, businesses, and employees, it takes only small changes in perceived risk to generate big losses in economic activity."

The paper relied on one of 15 planning scenarios - the detonation of a dirty bomb in a city center - identified by the Department of Homeland Security in an effort to focus anti-terrorism spending nationwide.

Other authors of the study are Paul Slovic with Decision Research and the University of Oregon; Anthony Barrett of ABS Consulting in Arlington, Va.; Ergin Bayrak of the USC Annenberg School for Communication and Journalism; and Michael Suher of Brown University.

This study is part of a larger special issue of the international journal Risk Analysis which showcases USC CREATE's research on risk assessment research of terrorism events, natural disasters and their economic impacts. The special series, entitled "Risk Perception Behavior: Anticipating and Responding to Crisis," was born from a special workshop organized by USC CREATE to explore possible avenues of research leading to insights in and includes 11 different studies.

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

add to favorites email to friend print save as pdf

Related Stories

Would you want to know about a terrorist threat at any cost?

Sep 09, 2010

As we approach the anniversary of the Sept. 11 attacks this weekend, many people may be thinking about the possibility of future terrorist strikes. If the government knew about a concrete threat, would you want it revealed ...

Bringing order to 'what if?'

May 31, 2007

[B]USC builds a risk assessment system for the Department of Homeland Security[/B] A team working under the auspices of the Department of Homeland Security-funded Center for Risk and Economic Analysis of ...

Security from chaos

Apr 16, 2008

There’s safety (and security) in numbers … especially when those numbers are random. That’s the lesson learned from a DHS-sponsored research project out of the University of Southern California (USC). ...

Terrorist attacks provoke surge in alcohol and drug use

May 11, 2009

Nearly one in 12 people exposed to terrorism report increased use and misuse of alcohol, according to researchers at Columbia University Mailman School of Public Health and the University of Michigan. In a study published ...

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

kochevnik
not rated yet Apr 24, 2012
Anytime there's a study you can bet the FBI, CIA and mossad are weighing their options. Next there will be a drill, and coincidentally Iranian no-dogooders will be arrested on suspicion of spreading weapons of mass destruction that very same day. Despite some massive screw-ups the public will blindingly believe they need to surrender more freedoms, like mandatory RFID chips and banning cash. Will the petrodollar collapse imminent it's very likely these agencies will stage another false flag. What would be unusual is if they didn't stage a false flag and attacked Iran anyhow.

More news stories

Clippers and coiners in 16th-century England

In 2017 a new £1 coin will appear in our pockets with a design extremely difficult to forge. In the mid-16th century, Elizabeth I's government came up with a series of measures to deter "divers evil persons" ...

Making graphene in your kitchen

Graphene has been touted as a wonder material—the world's thinnest substance, but super-strong. Now scientists say it is so easy to make you could produce some in your kitchen.