I do not live or work in London, but I go there often for meetings and sometimes for fun. Like millions of others who use the London tube system, I’ve been pondering what I should be doing in the wake of the bombings. My conclusion is that I should continue to use the tube because (a) the probability of being injured or killed is still vanishingly small, and (b) one should not be intimidated by terrorists. At first sight, (a) looks like a rational response, while (b) seems merely emotional or rhetorical. But the Economist pointed me to “Fear and the Response to Terrorism: An Economic Analysis”, a fascinating paper by Gary Becker (who is a Nobel laureate in economics) and Yona Rubinstein which has made me think that perhaps both are rational responses.
The society which has had the most experience of living with suicide bombing is Israel, and Becker and Rubinstein had the brilliant idea of examining how Israelis have responded to the threat. They looked at, for example, how bus bombings affect passenger behaviour. In the year November 2001 to November 2002, Israeli buses suffered an average of one suicide attack a month. This apparently had a profound effect on passengers — use of public buses went down by 30%.
But when they looked more closely at these figures, Becker and Rubinstein found significant differences between the responses of casual and regular bus users. Casual users (those who bought tickets on the day of travel) were much more likely to shy away (each attack cut their numbers by 40%). Regular users (who bought season tickets) seemed to have been largely undeterred.
Well, you say, maybe this is because season-ticket holders have no alternative. But Becker and Rubinstein found a similar pattern in patrons of cafes (also a target of suicide bombers). As the number of cafe-bombings increased, casual users stayed away, while habitues indulged their habit as usual. And nobody could really argue that one ‘has’ to use a cafe in the same sense that one may ‘have’ to use a bus to get to work.
The key to all this is the distinction between risk and fear. There is a non-linear relationship between the two which is what terrorism seeks to exploit: a small increase in risk leads to a disproportionate increase in fear. But, say Becker and Rubinstein,
Fear can be managed. Persons can handle their fears. They do so by accumulating the necessary skills. Like other investments in human capital, it is not a free-lunch and it does not pay back the same to anyone. Those who are more likely to benefit from the risky activity will invest and overcome their fears, while others will substitute the risky activity by other consumption or production plans.
So the rational response to the London bombings is business as usual. Bombers can nudge up the statistical risk a little. But only we can increase the fear.
