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The Economics of Roadside Bombs

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  • Matthew A. Hanson

    (Department of Economics, College of William and Mary)

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.

Suggested Citation

  • Matthew A. Hanson, 2007. "The Economics of Roadside Bombs," Working Papers 68, Department of Economics, College of William and Mary.
    • Handle: RePEc:cwm:wpaper:68
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    References listed on IDEAS

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    1. 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 961-970, September.
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    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.
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    9. Robert T. Jensen & Nolan H. Miller, 2007. "Giffen Behavior: Theory and Evidence," CID Working Papers 148, Center for International Development at Harvard University.
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    Cited by:

    1. Christopher Blattman, 2009. "Civil War: A Review of Fifty Years of Research," Working Papers id:2231, eSocialSciences.
    2. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
    3. Radha Iyengar & Jonathan Monten & Matthew Hanson, 2011. "Building Peace: The Impact of Aid on the Labor Market for Insurgents," NBER Working Papers 17297, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Iraq War; Instrumental Variables; Substitution Effect; Inferior Goods; Giffen Behavior; Terrorism;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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