If Iron Dome is used as it was designed to be, as a mobile means of protecting IDF forces in combat, or for defending high value targets, then it will be cost effective. If Iron Dome is used in the fashion falsely presented to justify it's development, as an area defense against qassam missiles from Gaza and Katyushka's from Lebanon, Iron Dome will deliver a major strategic casualty to Israel. Expending a $50,000 Tamir interceptor to knock down a $500 (at most) qassam hands Islamic Jihad the opportunity to do immense fiscal harm to Israel at little expense to itself. Indeed, as the Pk (probability of kill) for the Tamir is less than 1, then two or more will have to be expended to ensure the qassam is defeated. Worse, the minimum response time for Iron Dome precludes intercepting half of all rockets fired from Gaza, while politics will require it be fired anyhow. Iron Dome is a valuable addition to israel's defenses, but it is not a valid defense against qassam's. Recent developments in solid-state lasers will soon offer credible defense against the qassam.
UN: Gaza could be 'uninhabitable' by 2020 if trends continue (AP)
from the article: MESS Report / Iron Dome passes tests, but how much will it cost Israel?