Paying the Piper? Implications of Social Insurance Payments for Conflict Propensity

State leaders must often address domestic and foreign-policy concerns simultane-ously, though doing so can be complicated and risky. One way in which leaders can seek to satisfy domestic demands and pursue foreign policy goals simultaneously is by implementing policies that complement one another; i.e., the implementation of one policy influences the ease with which the other policy can be implemented. For instance, one manner in which leaders can placate domestic audiences is via distributive policies such as social insurance payments that provide economic security to individuals. By providing economic security guarantees, leaders may gain greater discretion over other policy areas, including foreign policy. However, while the social insurance effort may satisfy an audience and enable a leader to take foreign- policy action, especially high payment levels may indicate that a leader must devote an inordinate portion of his budget to domestic concerns, making foreign policy more difficult to implement. Thus, guarantees of economic security might provide leaders with greater foreign policy latitude until domestic expenditures reach sufficient levels that foreign-affairs budgets are reduced. We employ zero-inflated event count models to estimate the relationship between social-insurance levels and the number of Militarized Interstate Disputes in which states engage. Our analyses include 69 states between 1975 and 1990. Our models support the hypothesis that lower levels of social insurance lead to greater numbers of disputes, but that, after a certain level of insurance effort is passed, dispute involvement declines. Our findings suggest a differential effect of social insurance on a leader's ability to act in the foreign policy arena and support the notion that leaders may employ the welfare state to enhance their foreign-policy capabilities, though they appear to meet with conditional and limited success.