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A Review of War Costs in Iraq and Afghanistan

  • Ryan D. Edwards

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.

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File URL: http://www.nber.org/papers/w16163.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16163.

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Date of creation: Jul 2010
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Handle: RePEc:nbr:nberwo:16163
Note: EFG PE
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  1. Linda Bilmes & Joseph Stiglitz, 2006. "The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict," NBER Working Papers 12054, National Bureau of Economic Research, Inc.
  2. Ryan D. Edwards, 2010. "U.S. War Costs: Two Parts Temporary, One Part Permanent," NBER Working Papers 16108, National Bureau of Economic Research, Inc.
  3. Michael Grossman, 2005. "Education and Nonmarket Outcomes," NBER Working Papers 11582, National Bureau of Economic Research, Inc.
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