A large part of the response is irrational fear, true, a good example of salience bias. That said, there is a rational argument as well, and that is that terrorism has two special features:
- High variance : Even though deaths to date are low, there is a non-zero chance that someone will manage to pull off a very large attack (9/11 is an example, the next one might be a dirty bomb)
- Escalation : The point of terrorism is to create fear - if low level attacks don't promote fear the incentive is just to escalate until the attacks reach a point that does trigger a reaction. In other words - you're battling a human opponent and they will adjust their tactics to what you do.