• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

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

Extracts from this document...


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) ...read more.


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). Drawing conclusions from their theoretical analyses of terrorist activities and terrorist related behaviour, Sandler, Lapan & Walters, outline some policy recommendations/suggestions. They suggest governments should closely examine the economic benefits Vs the economic costs of employing passive ("technology based barriers"; "fortifying potential targets" etc) and active ("retaliatory raids"; "pre-emptive strikes" etc) ...read more.


The latter is the direct or immediate causes of terrorism. A detailed account of the permissive and precipitative causes are accounted for in (Ross; 1993, 320-325). Ross adds that the cause of the "oppositional political" form of terrorism lies in structural, psychological and rational theories. The first two constructs are not touched upon by analyses focusing upon "choice theoretical" constructs. In conclusion Alan B. Krueger & Maleckova's work concludes with addressing the causes of terrorism, although these inferences are based on the analyses of empirical data, and not based on theoretical tools they outlined at the start of their paper. The literature by Quan Li & Drew1 analyses rational choice theories and the effects (but no causes) of global institutions on terrorist activity. It doesn't ascertain direct causes but rather outlines the effectiveness of various policies by using statistical data techniques. Reference List: 1. "Economic Analysis Can Help Fight International Terrorism"; Todd Sandler, Walter Enders & Harvey E. Lapan 2. "Education, Poverty and Terrorism: Is There a Causal Connection?"; Alan B. Krueger & Maleckova 3. "The Effectiveness of Antiterrorism Policies: A Vector-Autoregression-Intervention Analysis"; Todd Sandler, Walter Enders 4. "Structural Causes of Oppositional Political Terrorism: Towards a Causal Model"; Jefferey Ian Ross. 5. "The Causes of Terrorism"; Martha Crenshaw ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    The Expert Law website7 suggests that other companies may be looking to refinance debt, using high-yield bonds, in order to pay down lines of credit, retire older bonds or consolidate credit at attractive rates of interest. Some firms may not be able to finance all their capital needs, through bank

  2. Liberalization: where it has lead us and where it is headed

    In general, we encourage our portfolio companies to take advantage of them. But such subsidies never make the difference between success and failure of a business. The marketplace determines that. The subsidies are just arbitrary gifts from the taxpayers to shareholders.

  1. Explain what is implied by the assumption that decision-makers are rational

    For example, somebody deciding or not they should buy a sandwich with limited money, will certainly consider the immediate satisfaction of their hunger, but it is dependant on the individual how much importance they would give to the fact that they wouldn't be able to get the bus back home

  2. Understand the reasoning and rational of the "Keiretsu" families.

    The impact of this involvement by the keiretsu in the investment stage is clear. By providing 'seed money' and investment capital to industry at below the market interest rate, Japanese business has a strategic advantage before the investment is even made.

  1. Selecting international modes of entry and expansion

    New Japanese FDI slowed in the 1990s, but economic data still reveal the strong position that Japanese firms hold in both exporting and direct investment. In 1995 the USA exported $576 billion in goods (and $219 billion in services), while Japan exported $443 billion in goods (US DOC, November 1997).

  2. Environmental Analysis Of Landis Lund.

    The purchase clerk always sorted invoices into supplier name order, and worked through the invoices until the allocated amount had been reached resulting in suppliers starting A, B, C etc getting paid every month. This process continued until we got put on stop from some major suppliers with company names lower down the alphabet.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work