American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Some Basic Economics of National Security
American Economic Review
vol. 103,
no. 3, May 2013
(pp. 508–11)
Abstract
We define national security (NS) as public policies that protect the safety or welfare of a nation's citizens from substantial threats. NS capital provides societal insurance against widespread harm or catastrophe, so optimal NS investments may have very low expected rates of return. Investment targeted at extreme events (war) has spillovers, reducing potential harm in less threatening situations as well. Potential threats are highly uncertain, which raises the value of ex-post scalability of NS technologies. Higher probabilities of extreme events raise the demand for flexibility, so ex-post responses to threats are more elastic, but may reduce current precaution.Citation
Murphy, Kevin M., and Robert H. Topel. 2013. "Some Basic Economics of National Security." American Economic Review, 103 (3): 508–11. DOI: 10.1257/aer.103.3.508Additional Materials
JEL Classification
- F52 National Security; Economic Nationalism
- H56 National Security and War