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The Economics of Roadside Bombs

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Author Info
Matthew A. Hanson () (Department of Economics, College of William and Mary)

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Abstract

The U.S. military has been criticized for its failure to stop the Iraqi insurgency’s use of improvised explosive devices (IEDs), which have caused most of the Coalition casualties. We use an instrumental variables approach to estimate the insurgent responses to U.S. military countermeasures. We find that the number of IED attacks (including unobserved attacks) goes up when attacks are made more costly to conduct, suggesting that IED attacks are inferior and may even be a Giffen good. A major benefit of IED countermeasures therefore comes in reducing non-IED attacks. Evaluations of the U.S. military’s $13 billion counter-IED effort have thus significantly understated its success.

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Publisher Info
Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number 68.

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Length: 22 pages
Date of creation: 11 Dec 2007
Date of revision:
Handle: RePEc:cwm:wpaper:68

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Related research
Keywords: Iraq War; Instrumental Variables; Substitution Effect; Inferior Goods; Giffen Behavior; Terrorism;

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Find related papers by JEL classification:
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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References listed on IDEAS
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  1. Robert T. Jensen & Nolan H. Miller, 2007. "Giffen Behavior: Theory and Evidence," NBER Working Papers 13243, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Jensen, Robert & Miller, Nolan, 2007. "Giffen Behavior: Theory and Evidence," Working Paper Series rwp07-030, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  3. Jaeger, David A & Paserman, Marco Daniele, 2006. "Israel, the Palestinian Factions and the Cycle of Violence," CEPR Discussion Papers 5498, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-36, July. [Downloadable!] (restricted)
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  5. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June. [Downloadable!] (restricted)
  6. Efraim Benmelech & Claude Berrebi, 2007. "Attack Assignments in Terror Organizations and The Productivity of Suicide Bombers," NBER Working Papers 12910, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Hoy, Michael & Robson, Arthur J., 1981. "Insurance as a Giffen good," Economics Letters, Elsevier, vol. 8(1), pages 47-51. [Downloadable!] (restricted)
  8. Bopp, Anthony E, 1983. "The Demand for Kerosene: A Modern Giffen Good," Applied Economics, Taylor and Francis Journals, vol. 15(4), pages 459-67, August.
  9. Battalio, Raymond C & Kagel, John H & Kogut, Carl A, 1991. "Experimental Confirmation of the Existence of a Giffen Good," American Economic Review, American Economic Association, vol. 81(4), pages 961-70, September. [Downloadable!] (restricted)
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