Are terrorists rational? Terrorism in general, and suicidal terrorism in particular, is
  popularly seen as “irrational,” but many economists and political
  scientists argue otherwise.


This quote is from Terrorism: The relevance of the rational choice model by Bryan Caplan. This paper has been published in 2006 in Public Choice. In relation with the recent terrorist attacks in Paris (Nov. 15), is there any new (economic) development on the question of the rationality of terrorism?

Edit: the title is intentionally short but by saying “is X rational?" I definitely mean "Can X be rationalized?"
I guess you might already know this, but I wanted to add a little detail to the other answers for the sake of any layman who comes here and gets the wrong end of the stick.

What is meant by rationality?

It is important to begin by saying that when economics use the term rational they have in mind a fairly precise definition that does not perfectly coincide with the way the word is sometimes used colloquially:


  We say that a decision maker is rational if
  
  
  s/he has preferences that are transitive and complete
  s/he acts in a manner consistent with optimization with respect to those preferences. 
  


On the first bullet: suppose some one has to make a decision. We say that they have transitive and complete preferences if (i) they are able to rank the alternatives among which they choose from "most preferred" to "least preferred", and (ii) that ranking is internally consistent.

On the second bullet: A person acts in an optimal manner given their preferences if they choose the alternative that is 'most preferred' among the set of all feasible alternatives.

So are terrorists rational?

As others have noted, the literal answer to the question is that we can't really (empirically) verify that terrorists are rational. This is because observing one rational decision does not rule-out the possibility that the individual concerned made an irrational decision at some point in the past (or that they will make an irrational decision in the future). The best we can manage is to look for behavior that violates the two conditions above and take observations of such violations to be evidence of irrationality.

But, to address the spirit of the question: just because voluntarilly committing suicide and murder in the name of your beliefs may seem irrational in the colloquial sense does not mean that it is necessarily so. Indeed, if a person has carefully considered the alternatives available to them and decided that the option they find most attractive is to conduct a suicide attack then this behaviour is entirely consistent with rationality.

Rational terrorism in context

It is important to stress that there is no value judgement implicit in an eocnomist describing behaviour as rational. Just because something is rational behaviour does not mean that it is good or desirable or can be condoned. Rather, it just means that we think we have a systematic way of understanding why people might choose to behave in a certain way. Building a systematic understanding of a phenomenon is an important first step in deciding upon the best way to respond to it.