Since 2001, more than 40 pieces of legislation have been passed by Federal Parliament increasing the powers of domestic security and law-enforcement agencies to conduct counter-terrorism operations and restricting the legal rights of terrorism suspects. To that you can add huge increases in the budgets of those agencies.

And yet the study reveals that almost 40 per cent of voters believe the Government should be doing more to prevent terrorism, whereas only 10 per cent believe it's done too much.

There's just one small problem with all this. Australians, like people in most countries, have a hugely exaggerated impression of the likelihood of terrorist attacks. Actually, make that two small problems. The other is we have an exaggerated impression of governments' ability to prevent attacks.

It's a well-known finding of psychology that humans tend to overestimate the probability of rare events, while underestimating the probability of more common events. That's partly because rare events may be more dramatic and tend to stick in our minds, whereas more frequent events tend to fade into the background.

It's hard to forget the events of September 11, 2001, in which 3000 people were killed, and the Bali bombings of October 2002, in which more than 200 people were killed, including 88 Australians. But for a significant terrorist act on Australian soil you have to go back more than 30 years to the Hilton Hotel bombing in 1977, in which just three people died.

None of those events gives us a realistic idea of the probability of an attack. Transnational terrorism across the world leads to an average of 420 deaths a year. With a global population of 6.6 billion, that's not a big risk.

The chance of being killed in a road accident is very much higher. Australia's annual road toll is four times that figure for the whole globe. And in the US, 10 times as many people are killed on the roads each year as the number killed in the unprecedented and unrepeated events of September 11.

Even the chance of contracting HIV/AIDS would be much higher. But modern politicians are much more in the business of pandering to the public's misperceptions - and exploiting them for their own ends - than they are of setting us straight on the facts of life.

In a study of terrorism prepared for the Copenhagen Consensus project by Professor Todd Sandler, of the University of Texas, and two other economists, they conclude that "guarding against terrorism can use large resources for little reduction in risk".

What's more, defensive measures against terrorism "may simply change the focus of attacks (for example from hijacking to kidnaps) and even increase attacks by creating new grievances".

Sandler and his colleagues conducted an analysis of the costs and benefits of five different approaches to combating terrorism. I must warn you that, because of the dearth of information, this study is even more reliant on assumptions than usual. Even so, in three cases the cost of the action so far exceeds the benefits that doubts about the reliability of the estimates recede.

Because the loss of life is so low, they measure the benefits of successful counter-terrorism measures in terms of loss of gross domestic product avoided. Trouble is, terrorism does little to disrupt economic growth, as even September 11 demonstrated.

Using the case of the US, Sandler estimates that simply continuing the present measures involves costs exceeding benefits by a factor of at least 10. Adopting additional defensive measures (such as stepping up security at valuable targets) would, at best, entail costs 3.5 times the benefits. Taking more pro-active measures (such as invading Afghanistan) would have costs at least eight times the benefits.

According to Sandler, only greater international co-operation, or adopting more sensitive foreign policies to project a more positive image abroad, could produce benefits greater than their (minimal) costs.

What's that? You don't care what it costs because no one can put a value on saving a human life? Heard of opportunity cost? Taxpayers' money we waste on excessive counter-terrorism measures is money we can't spend reducing the gap between white and indigenous health - or, if that doesn't appeal, on buying Olympic medals.