Public Choice

, Volume 138, Issue 3–4, pp 317–345

The life satisfaction approach to valuing public goods: The case of terrorism


DOI: 10.1007/s11127-008-9361-3

Cite this article as:
Frey, B.S., Luechinger, S. & Stutzer, A. Public Choice (2009) 138: 317. doi:10.1007/s11127-008-9361-3


Terrorism has large social costs that are difficult to quantify for the well-known problems of eliciting people’s preferences for public goods. We use the LSA to assess these costs in utility and monetary terms. Based on combined cross-section time-series data, we estimate the costs of terrorism for France and the British Isles. We find large negative effects of terrorism on life satisfaction that translate into considerable compensating surpluses for a hypothetical reduction in terrorism, in particular for the serious conflict in Northern Ireland. The effects of terrorism are robust and differ across groups in accordance with prior expectations.


LSA Non-market valuation Cost-benefit analysis Subjective well-being Terrorism 

JEL Classification

I31 H56 D61 

Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  • Bruno S. Frey
    • 1
  • Simon Luechinger
    • 1
  • Alois Stutzer
    • 2
  1. 1.Institute for Empirical Research in EconomicsUniversity of ZurichZurichSwitzerland
  2. 2.Department of Business and EconomicsUniversity of BaselBaselSwitzerland

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