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A Review of War Costs in Iraq and Afghanistan

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  • Ryan D. Edwards

Abstract

As of this writing, the wars in Iraq and Afghanistan are in their eighth and tenth years, having accrued nearly a trillion dollars in direct military costs. I review the history of cost forecasts for these ongoing engagements, highlighting the differences across them in scope and accuracy, assessing the methods and practice of cost forecasting, and exploring the implications of the war costs themselves. Besides the unanticipated length and breadth of the military conflicts themselves, a related and equally important component of costs is the life cycle of costs associated with caring for veterans. The forecasts we have of such costs imply high levels of public spending per veteran and very high levels of costs associated with pain and suffering per veteran, as high as 10 to 25 percent of lifetime wealth. I also discuss the methods and motivations associated with war cost forecasts by comparing them with other types of aggregate forecasts, which are prone to similar types of errors. The history of war cost forecasts suggests that increasing their frequency and transparency may improve their usefulness in guiding policy.

Suggested Citation

  • Ryan D. Edwards, 2010. "A Review of War Costs in Iraq and Afghanistan," NBER Working Papers 16163, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16163
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    File URL: http://www.nber.org/papers/w16163.pdf
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    References listed on IDEAS

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    1. Grossman, Michael, 2006. "Education and Nonmarket Outcomes," Handbook of the Economics of Education, Elsevier.
    2. Edwards, Ryan D., 2014. "U.S. war costs: Two parts temporary, one part permanent," Journal of Public Economics, Elsevier, vol. 113(C), pages 54-66.
    3. Linda Bilmes & Joseph E. Stiglitz, 2006. "The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict," Working Papers id:387, eSocialSciences.
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    Cited by:

    1. 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.
    2. Edwards, Ryan D., 2014. "U.S. war costs: Two parts temporary, one part permanent," Journal of Public Economics, Elsevier, vol. 113(C), pages 54-66.
    3. Olaf J. de Groot, 2012. "Analyzing the costs of military engagement," Economics of Peace and Security Journal, EPS Publishing, vol. 7(2), pages 41-49, July.
    4. Tilman Brück & Olaf J de Groot & Friedrich Schneider, 2011. "The economic costs of the German participation in the Afghanistan war," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(6), pages 793-805, November.

    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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