The costs of terrorism very often come mostly from the fear and consequent reaction (or overreaction) it characteristically inspires (qualities stoked by the terrorism industry), not from its direct effects which are usually comparatively limited. Therefore, policies designed to deal with terrorism should focus more on reducing fear and anxiety as inexpensively as possible than on objectively reducing the rather limited dangers terrorism is likely actually to pose. Doing nothing (or at least refraining from overreacting) after a terrorist attack is not necessarily unacceptable, and, despite U. S. overreaction, the campaign against terror is generally going rather well because, no matter how much they might disagree on other issues (most notably on war in Iraq), there is a compelling incentive for states to cooperate to deal with a common problem.
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John Mueller (2005) studied this question.
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