Do perceptions of economic well-being predict the onset of war and peace?

While material deprivation is an important determinant of civil conflict, psychological factors can also explain the incentives for warfare. This paper considers whether and to what extent civilian perception of individual economic well-being, possibly influenced by hearts-and-minds tactics that are employed by insurgents, predicts war and peace onset. Using unique micro data bracketing the onset of the Nepalese Civil War, we find that perceived income inadequacy is associated with earlier war onset during periods of rebel recruitment, and with later peace onset in general. These results are mainly driven by the effect of perceived deprivation among marginalised communities on rebel-initiated violence, and hold regardless of whether we account for actual economic circumstance. Our results suggest that civilian perception of economic well-being ought to be considered seriously as a determinant of war and peace.