Study Finds the Costs of a Terrorist Attack in Los Angeles

A terrorist attack on the Los Angeles financial district could end up costing about $16 billion, according to a study conducted by a team of USC researchers, economists, and decision scientists.

As a part of the study 625 people from across the nation were shown newspaper articles and newscasts of a fake terrorist attack on the financial district to measure how fear and risk perception would affect the economy after an attack.

The results, which were released Wednesday, showed that 41 percent of people would not consider shopping or dining in the financial district, while employees would demand a 25 percent increase in wages for them to return to their jobs.

Immediate economic costs from a terrorist attack on the financial district would be about $1 billion.

While economists tend to focus more on these costs, the study shows that a majority of the $16 billion would come from psychological effects, which could last for a decade.

The study was published in Risk Analysis as a part of a larger special issue that showcased USC CREATE’s risk-assessment research on terrorism events, natural disasters and their economic impacts.

“We decided to study a terrorist attack on Los Angeles not to scare people, but to alert policymakers just how large the impact of the public’s reaction might be," said William Burns, a research scientist and co-author of the study, according to USC News.
"This underscores the importance of risk communication before and after a major disaster to reduce economic losses."

USC’s Adam Rose and Ergin Bayrak helped co-author the study.