Four dot points to end the chapter

  • • A basic neoclassical consumer theory of choice can be applied to the terrorist’s choice between ‘terrorism’ and ‘legitimate activity’.
  • • The fundamental prediction is that the terrorist will engage in as much of both types of activity as possible in order to get the most satisfaction from the available resources.
  • • Because legitimate activity might not be a viable substitute for terrorism, the neoclassical model might be better used to explain choices between attack methods. This helps us to explain the patterns of behaviour observed around attacks on embassies.
  • • When terrorism becomes a part of the individual’s or group’s identity, the willingness to substitute away from terrorism may be far lower than the neoclassical model would lead us to expect.


  • 1 Dnes and Brownlow (2017, p.702).
  • 2 It should be noted, however, that splinter groups including Real IRA remain active.
  • 3 Developed by Hicks and Allen (1934a & 1934b).
  • 4 The model is depicted as a choice between two goods because it is easier to draw two- dimensional diagrams. We can easily explore the choices between coffee and tea, for example. If this sounds too restrictive, one good can be made a ‘composite’ good to stand in for everything else in the consumer’s shopping basket.Then, if we want to analyse the consumer’s choices regarding coffee and ‘everything else’ we can still do so with the help of two-dimensional diagrams.
  • 5 Here satisfaction or utility is usually assumed to be some function of what the terrorist group wants. Frey and Luechinger (2003), among others, assume that this is political influence.
  • 6 If terrorism and legitimate activity were perfect substitutes, the indifference curves would be straight lines. Regardless of how much or how little of either activity the group was currently involved in, they would always give up units of one activity in exchange for units of the other at a constant rate.
  • 7 Pareto (1909) argued that this type of rational choice framework really represents the last step of a decision-making process characterised by much trial and error.
  • 8 Economists can get themselves into difficulty here. If we observe a choice we might say that this must have been the optimal choice otherwise the group would have chosen differently. This is quite tenuous but it has not stopped a relatively intricate literature emerging that tries to show that chosen bundles result from utility maximising behaviour. This ‘integrability’ problem, as one might imagine, has not been resolved. Mirowski (1989) explores this matter in considerable depth. The technical economics literature upon which he sets his sights includes landmark theoretical papers by Samuelson (1948, 1950) and Houthakker (1950). Some of this work is also summarised by another major contributor to the debate, HalVarian (seeVarian 2006).
  • 9 Time is not something that economists have overlooked and there is a large literature that deals with the problem. Much of economics is explicitly cast in a temporal setting. For an example of an attempt to address some of these issues in the particular setting that we have been discussing, neoclassical consumer theory, see DeSerpa (1971).
  • 10 Another way in which this model can be used is as a framework for thinking about what the United States was trying to accomplish following the 9/11 attacks. Part of the rationale, beyond simple revenge, for pursuing Al-Qaeda was to disrupt any other attacks that the group might have been planning. This logic could be reflected in the neoclassical model by depicting Al-Qaeda as facing a trade-off between ‘planning and perpetrating terrorism’ and ‘fighting the US Army in Afghanistan’. By attacking Al-Qaeda in Afghanistan, the group would be forced to reallocate some of their scarce resources away from terrorism and towards its own defence. The US attacks could be depicted as an attempt to pivot Al-Qaeda’s budget constraint and preferences away from terrorism.
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