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The economic costs of military conflict

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  • Ron P Smith

    () (Birkbeck University of London)

Abstract

There is a large literature on the economic costs of military conflict, which uses a variety of methods including accounting procedures, statistical models and event studies of how stock markets respond to news of conflict. This literature is not only subject to all the criticisms directed against cost–benefit analysis but also introduces an element of arbitrariness by not considering benefits. This article uses four questions to structure a discussion of the calculation of conflict costs. The first concerns the purpose of the calculation: why is it being done? The second concerns the counterfactual: what comparison is being made? The third concerns the data: where do the numbers come from? The fourth concerns aggregation and valuation: how are the elements of costs (over outcomes, time and individuals) combined? The literature is often not clear on the answers to these questions, tending to take them for granted. However, the answers are crucial to the calculation and are not merely technical matters but rest on both the underlying objective of the calculation and fundamental philosophical and ethical judgements.

Suggested Citation

  • Ron P Smith, 2014. "The economic costs of military conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 51(2), pages 245-256, March.
  • Handle: RePEc:sae:joupea:v:51:y:2014:i:2:p:245-256
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    Cited by:

    1. repec:eee:poleco:v:55:y:2018:i:c:p:151-168 is not listed on IDEAS
    2. Kimbrough, Erik & Laughren, Kevin & Sheremeta, Roman, 2017. "War and Conflict in Economics: Theories, Applications, and Recent Trends," MPRA Paper 80277, University Library of Munich, Germany.
    3. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2017. "Balance of power and the propensity of conflict," Games and Economic Behavior, Elsevier, vol. 103(C), pages 168-184.
    4. repec:bla:ecinqu:v:55:y:2017:i:1:p:479-500 is not listed on IDEAS
    5. repec:epc:journl:v:12:y:2017:i:2:p:21-31 is not listed on IDEAS
    6. Chang, Yang-Ming & Sanders, Shane & Walia, Bhavneet, 2015. "The costs of conflict: A choice-theoretic, equilibrium analysis," Economics Letters, Elsevier, vol. 131(C), pages 62-65.
    7. David Hebert, 2015. "John J. Pitney and John-Clark Levin, Private anti-piracy navies: How warships for hire are changing maritime security," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(3), pages 365-369, September.
    8. McBride, Michael & Skaperdas, Stergios, 2014. "Conflict, settlement, and the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 75-89.
    9. repec:cai:repdal:redp_273_0307 is not listed on IDEAS
    10. Bove Vincenzo & Elia Leandro, 2014. "The impact of American and British involvement in Afghanistan and Iraq on health spending, military spending and economic growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 1-15, January.
    11. Olaf J. de Groot & Carlos Bozzoli & Tilman Bruck, 2015. "The Global Economic Burden of Violent Conflict," HiCN Working Papers 199, Households in Conflict Network.
    12. repec:kap:theord:v:85:y:2018:i:3:d:10.1007_s11238-018-9661-0 is not listed on IDEAS
    13. McBride, Michael & Skaperdas, Stergios & Tsai, Pi-Han, 2018. "Why go to court? Bargaining failure under the shadow of trial with complete information," European Journal of Political Economy, Elsevier, vol. 55(C), pages 151-168.
    14. Vincenzo Bove & Leandro Eliay & Ron P Smith, 2014. "The relationship between panel and synthetic control estimators of the effect of civil war," BCAM Working Papers 1406, Birkbeck Centre for Applied Macroeconomics.

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    Keywords

    conflict; economic costs; war;

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