Agency Problems and Airport Security: Quantitative and Qualitative Evidence on the Impact of Security Training

We analyze the issue of agency costs in aviation security by combining results from a quantitative economic model with a qualitative study based on semi-structured interviews. Our model extends previous Principal-Agent models by combining the traditional fixed and varying monetary responses to physical and cognitive effort with non-monetary welfare and potentially transferable value of employees' own human capital. To provide empirical evidence for the trade-offs identified in the quantitative model we have undertaken an extensive interview process with regulators, airport managers, security personnel and those tasked with training security personnel from an airport operating in a relatively high risk state, Turkey. Our results indicate that the effectiveness of additional training depends on the mix of `transferable skills', and `emotional' buy-in of the security agents. Principals need to identify on which side of a critical tipping point their agents are to ensure that additional training, with attached expectations of the burden of work, aligns the incentives of employees with the principals' own objectives.