Economics of computer hacking

Economics of computer hacking - The Economics of Computer...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
The Economics of Computer Hacking * Peter T. Leeson Department of Economics West Virginia University Christopher J. Coyne Department of Economics Hampden-Sydney College Abstract This paper considers various classes of computer hackers, with a special emphasis on fame-driven versus profit-driven hackers. We use simple economic analysis to examine how each of these hacking “markets” work. The resulting framework is employed to evaluate current U.S. policy aimed at reducing the threat of computer hacking and shows that this policy is largely effective. We consider policy adjustments consistent with the insights of the framework provided as a means of strengthening cyber security. * We thank Peter Boettke, Tony Carilli and Tyler Cowen for helpful comments and suggestions. The financial support of the Critical Infrastructure Project, the Earhart Foundation and the Oloffson Weaver Fellowship is also gratefully acknowledged.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 1 Introduction In the digital age cyber security is perhaps the most important form of security individuals must be concerned with. Banks, schools, hospitals, businesses, governments and virtually every other modern institution you can think of stores and organizes its information electronically. This means that all of your most sensitive information—from credit card numbers and checking accounts, to medical records and phone bills—is accessible for viewing, stealing, or manipulating to anyone with a PC, an Internet connection, and some computer know-how. The increasingly computer-based world is increasingly vulnerable to malevolent computer hackers. While we know little about these shadowy hackers we have a very clear picture of the damage they do. In 2003, hacker-created computer viruses alone cost businesses $55 billion—nearly double the damage they inflicted in 2002 (SecurityStats.com 2004). In 2000 the total cost of all hack attacks to the world economy was estimated at a staggering $1.5 trillion (PricewaterhouseCoopers 2000). In a 2004 survey of American companies and government agencies conducted by the Computer Security Institute, over half of respondents indicated a computer security breach in the past 12 months and 100 percent of respondents indicated a Web site related incident over the same period (CSI 2004). If anything these figures probably understate the volume of hacker-related security breaches. Firms, especially financial institutions, are extremely reluctant to report hacker-related break-ins for fear of how this may affect customers’ and stockholders’ impressions of their security. In the survey of American businesses conducted jointly by CSI and the FBI, nearly 50 percent of firms that experienced system intrusion over the last year stated that they did not report this intrusion to anyone. The
Background image of page 2
3 primary reason cited for this was the perceived negative impact on company image or stock (CSI 2004: 13-14), and similar findings have been corroborated by others (see for instance, United Nations 1994; Schell et al 2002: 40). What can we say about the
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/08/2009 for the course CJUS 4000 taught by Professor Dr.holt during the Spring '09 term at UNC Charlotte.

Page1 / 34

Economics of computer hacking - The Economics of Computer...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online