Utility maximisation, principle of rationality, scarcity of resources, substitutional and complementary effects of income and

Utility maximisation, substitutional/complementary effects, and cost versus benefit analyses, are underpinned by the principle of rationality, and used as theoretical constructs by neo-classical  economists to analyse the behaviour of terrorists. Alan B. Krueger & Maleckova, utilise the principles of utility maximisation to delineate the participative mechanisms concerning terrorist behaviour. Todd Sandler, Walter Enders & Harvey E. Lapan, make use of “choice theoretic” paradigms, in which they posit the principles of rationality that terrorist groups are bound by. Walter Enders & Todd Sandler attempt to propose other “choice theoretical considerations”. Substitutional and complementary effects of the various modes of terrorist attack are presented, pursuant to our understanding of terrorists/terrorist groups, being rational, goal-orientated agents. The purpose of this discussion is to outline the theoretical tools used by orthodox economists, the policy recommendations following those tools and comparing and contrasting whether the tools actually analyse the causes of terrorism.

The paper by Krueger & Maleckova analyses the participative mechanisms involved in terrorist behaviour. Assuming parallels between crime and terrorism, they seek to utilise the studies of Gary Becker ("Crime and Punishment: An Economic Approach" – 1968) to emphasise how individuals ought to decide between illegal and legal activties by deciding which activties would bring about the most satisfaction, and hence would produce the greatest utility. They use this theoretical construct to draw similarities between criminal behaviour and terrorist behaviour. Furthermore they state using the studies of four economists, Landes (1878), Sandler, Tschirhart and Cauley (1983), that the participation of individuals in terrorist acts is largely dependent on the “differential payoff” – the difference the benefits of terrorist activities and costs or penalties involved in carrying out that terrorist activity (Krueger, Maleckova; 2003, 122 ). The “choice theoretical” models put forward by Sandler, Enders & Lapan in their paper, consdier terrorist groups to be rational entities – rational not because of their desired ends but due to their reactions to the constraints placed on them due to a scarcity of resources. The paper depicts terrorist groups to be economic agents who “mazximise beneficial returns and minimise costs”, by opting to choose the lowest per-unit cost out of the various modes of attack available (sky-jacking, bombings, kidnamppings etc). Finally, (Enders, Sandler; 1993, 830-831), address the substitutional and complementary variations that terrorists can resort to for the “consumption of basic commodities”. By “basic commodities” Enders & Sandler are referring to the benefits gained from terrorist tactics. Various modes of attack or “substitution possibilities” may be employed as long as similar commodities are consumed and hence maximum utility is obtained. The concept of complementarity is seen as a measure that is undertaken when the amalgamation of various modes of terrorist attack adds greatly to the additional output of consuming basic commodities.  Moreover, it is postulated that, terrorists are rational decision-makers who must choose due to resource contraint. The three decisions to be made are: choosing “between terrorist and non-terrorist activities”, depending on the relative costs; choosing “between different terrorist tactics”, again dependent on substitutional possibilities and income; choosing “between different non-terrorist activities” (Enders, Sandler; 1993, 830). From this understand the authors go on to infer valuable information. They proposed four derivations (two of which have been addressed by the previous theoretical analyses, which I shall leave out): 1) If there were an increase/decrease in “price of one complementary event” then all the related complementary events would fall in number. 2) a rise in amount of resources would foment more terrorist activity & a fall in resources would stymie the frequency of terrorist activity – this is the case for normal goods (Enders, Sandler; 1993, 831).