This new book by Alan Krueger, full of first-rate empirical work, punctures many myths about terrorism. For instance poverty does not breed terrorism, once you look at the data. Here is the book’s home page.
My only complaint is that the book does not deliver on its title; it tells me what doesn’t make a terrorist, but I still don’t know what does make a terrorist. (Don’t even mention Islam in the comments unless you have something new — and analytical — to say; citing the Koran on jihad isn’t going to solve the puzzle.)
My crude view sees terrorism as meshed with three factors:
1. The belief that it is justified to kill innocent people for sufficiently important political ends. Of course people who support the fighting of WWII hold this view too.
2. False positive beliefs about how the world works. Osama bin Laden probably doesn’t know the Alchian and Allen theorem, the make-work fallacy, the Heckscher-Ohlin results, nor does he realize that his Islamic Caliphate would not work very well.
3. Some third factor(s), rooted in human psychology.
Most non-terrorists have more of #1 and #2 than is good for the world. And I expect that terrorists have a special excess of #1 and #2. I nonetheless think that the third factor is the key to understanding "what makes a terrorist." You could start your reading here, and here, good luck. Is it "narcissistic rage"? Authoritarian or submissive personality types? Freudian mumbo-jumbo at work?
By the way, the difficulty of pinning down the third factor(s) has policy implications. We should adopt policies which are robust toward not understanding the strategies or game-theoretic solution concepts of the terrorists. Complicated signals are unlikely to communicate the appropriate information in practice. However bad is our model of the terrorists, I suspect that their model of us is even worse.