Deterring Suicide Bombers

So far this year, Israel has suffered two attacks at the hands of Palestinian men who resided in East Jerusalem. In the wake of the attacks, Israeli Prime Minister Ehud Olmert renewed a legislative proposal aimed at deterring would-be terrorists by punishing the families of the attackers. Punishment would include home destruction and cancelled access to Israeli social insurance programs. Eric Westervelt's NPR story offers more on the proposed law.

For the moment, let's leave aside the major issue of whether it is moral to punish people for murders committed by a dead relative. The objective of the law is clear: to provide a disincentive to suicide attacks by punishing the perpetrator's surviving family members. Should the law pass, suicide bombers would forgo not only their own lives but also, potentially, the welfare of their families. By raising the opportunity cost of a suicide attack, the supporters of the law hope to reduce the number of attacks. Recent research on the economic roots of terrorism can help us think about whether the policy will achieve its intended consequences.

In a 2003 research paper, Alan Krueger and Jitka Maleckova found that participation in terrorism is unrelated, and possibly even positively related, to a person's income and education. As Daniel Lerner pointed out in a study of Middle East extremism in the 1950s, would-be terrorists are not so much have-nots as they are want-mores. In a more recent article in The American, Krueger cites Claude Berrebi's research on the characteristics of Palestinian terrorists from the West Bank and Gaza Strip:

"[Berrebi] compared suicide bombers to the whole male population aged 16 to 50 and found that the suicide bombers were less than half as likely to come from families that were below the poverty line. In addition, almost 60 percent of the suicide bombers had more than a high school education, compared with less than 15 percent of the general population."

Apparently, better-educated terrorists are more likely to be committed to their organization's goals and also more likely to have the financial means to participate actively. After all, a person needs some level of income security to have pursuits beyond basic subsistence.

Krueger and Maleckova also cite some anecdotal evidence suggesting that terrorist groups attempt to recruit somewhat educated suicide bombers. Nasra Hassan, a UN relief worker, interviewed 250 Palestinians militants and their associates between 1996 and 1999:

"A planner for Islamic Jihad explained to Ms. Hassan that his group scrutinizes the motives of a potential bomber to be sure that the individual is committed to carrying out the task. Apparently, the groups generally reject for suicide bombing missions 'those who are under eighteen, who are the sole wage earners in their families, or who are married and have family responsibilities.'"

The evidence presented by Krueger and Maleckova casts doubt on the effectiveness of the Israeli Prime Minister's proposal. The threat to families isn't much of a threat to a terrorist with minimal or zero family responsibilities. The law may not present much of a threat to terrorists with families either. If the suicide bombers tend to be a bit more educated and financially stable than their peers, they will probably develop a contingency plan that softens the punitive blow to their families. Similarly, terror groups may alter their tactics in response to the law, perhaps offering some sort of compensation to the families of suicide bombers as a recruitment incentive.

Discussion Questions

1. Economic analysis allows us to answer "what if?" questions, such as "What would happen to the number of suicide attacks if the Israeli government punished the families of suicide bombers?" Economics is not so great for dealing with "what should?" questions; but as citizens, we still have to tackle them. What should the Israeli legislature do about Olmert's calls to punish the families of suicide bombers?

2. In Krueger's article from The American, he suggests using "demand-side" policies to reduce the number of terrorist attacks. In the "market" for terrorists, the demanders are terrorist groups hoping to employ the services of suicide bombers. According to Krueger, what types of policies might suppress the demand for terrorists? Can you think of ways for Israel and its allies, like the United States, to go about attacking the financial resources of terror groups?

3. Krueger points out that we're unlikely to find many would-be terrorists among the illiterate and destitute. What does he say about the notion that "the elite become terrorists because they are outraged by the economic conditions of their countrymen?"

On Economic Collapse

Early in the recent conflict between Israel and Lebanon, Kai Ryssdal, the anchor on the public radio program
"Marketplace," conducted two interviews: one with an Israeli civilian living in Haifa and another with a journalist living in Beirut. He didn't ask for their feelings and opinions about the war. Instead, he talked to them about the details of their everyday economic lives.

The parallels were striking. Each talked primarily about the supermarkets, or more particularly, what wasn't in the supermarkets. In Israel, there was no bread or milk, because the delivery drivers didn't want to risk being on the roads; in Lebanon, there were long lines for the little that remained. (Remember, too, that these interviews were early in the conflict--as the weeks went on, what little had stocked the shelves was long gone.)

Both interviewees talked about the dangers of travel on the roads. The Israeli military viewed Lebanese roads as strategic targets, and being on the open road in Israel left one vulnerable to rocket attacks.

When we learn about comparative advantage in economics, the theory is rosy. The market, after all, coordinates the efforts of complete strangers from many different countries to produce a product as seemingly simple as a pencil. Missing from most of these discussions are the assumptions underlying the free flow of international trade, including, most importantly, the assurance that the cargo and its transporter will arrive safely at their destination.

In other words, gains from trade can only be realized when the infrastructure is there to support it. It only takes a few days of shelling in the Middle East--or a few days without clean water and electricity in New Orleans--to remind us that the economic web we depend on can be quite fragile.

1. One of the arguments against free trade is that it is unreasonable to depend on foreign suppliers of essential goods like food and energy. Yet free trade also yields incredible benefits. How does an economist balance these two arguments? How would you go about finding the optimal level of domestic and foreign production? Why might the optimal choice for Israel be different than the optimal choice for, say, Singapore or the United States?

2. Economies of scale exist when a few large firms can produce a good or service at a much lower cost than many small firms. For example, massive farms have become the norm in the United States, where a century ago small farms dominated (but had much higher costs). How much of the food you eat comes from farms within 10 or 20 miles of your home? In the case of a major emergency, how long would it take for food shortages to become a major problem? Would the United States be better off if everyone still owned a farm--or are the gains from trade we've realized from specialization large enough to offset that change? How can you tell?

3. The interviewees talk about how expensive it is for Lebanese to evacuate Beirut, and how difficult it is to get cash from ATMs in Israel. Think about the implications of sustained political upheaval on economic growth. In some ways, war acts like a tax, making everything more expensive. Try drawing some supply and demand diagrams for various goods, and guess as to what happens to those markets in times of turmoil. What could the governments of Israel and Lebanon do, if anything, to help alleviate the economic suffering of their people?

Bring Back the Draft?

During the 1960s and early 70s, economists--including Milton Friedman of the University of Chicago--made a strong case for ending the draft, the government practice of forcing people to join the military. Those who supported the draft at the time argued that an all-volunteer military would be far too expensive. Eliminating conscription would force the military to pay higher wages in order to attract young men. Higher pay would cripple the military, especially during Vietnam.

The response from Friedman and other draft opponents? Sure, the draft lowers the budgetary cost of building up a military, but only at a massive opportunity cost. Those who join the military because of the draft or the fear of being drafted do so against their will. Most draftees (if not entirely opposed to military service) would require a higher level of pay in order to enlist as a true volunteer. Conscription forces people into service at lower pay than they would otherwise earn. That is, draftees pay a conscription "tax" in order to finance the nation's military build-up. The conscription tax is equal to the difference between the pay draftees would earn in the absence of the draft and the military pay they earn because of it. Better, according to Friedman, to abolish the draft altogether and have all tax payers bear the costs of maintaining an army of soldiers who voluntarily accept their posts and pay.

Draft opponents won the day Congress allowed the law authorizing the draft to expire on June, 30 1973. Why, then, is Charles Wheelan--another University of Chicago economist--calling for a return to conscription? Read his latest Yahoo! Finance column to find out.

As Wheelan points out, moral hazard occurs when people behave differently--and sometimes recklessly--because they don't bear the full costs of their actions. Mountain climbers may take riskier routes because they know there's a good chance search and rescue can find them if they get stranded. Insured drivers may exercise less caution because their policy reduces the cost of getting in an accident. Auto insurers address moral hazard by requiring deductibles--a sum that the driver must pay on a claim before the insurance kicks in. If drivers understand that they'll pay the first $1,000 for any damages from an accident, they may drive a bit more cautiously.

Wheelan applies this theory to U.S. foreign policy, arguing that an unintended consequence of the all-volunteer army is that it makes the electorate more likely to support U.S. military involvement in overseas conflicts.

1. Wheelan proposes a modified draft. In what ways is his proposal like the deductible on your auto insurance policy? Do we need another conscription tax to put a check on our troop commitments in times of humanitarian crisis?

2. How is deficit financing (issuing government bonds instead of collecting taxes) like the moral hazard problem surrounding foreign intervention and invasion by the U.S. military?

3. In what way is Wheelan's proposal subject to the same criticism Friedman leveled against the draft nearly 40 years ago?

4. Despite enlistment bonuses and aggressive recruiting, the U.S. military has had difficulty increasing manpower during the Iraq war. Politicians and the electorate cannot decide to invade or intervene if would-be soldiers won't enlist. Do you think the free market for military labor that Friedman championed provides enough of a check on the moral hazard of a volunteer army? Or do you agree with Wheelan that some form of conscription is needed to discourage hazardous decision making?

To read more about the role economists played in ending the draft, click here.

Postwar Economics

You'd think that wartime devastation would bode ill for the economic prospects of Iraq's most war-torn cities. For example, you might expect that the Japanese cities of Hiroshima and Nagasaki, which were destroyed by nuclear weapons, would have experienced slower than usual economic growth in the decades following World War II.

Surprisingly, though, long-run economic growth is resilient to the damages of war. Edward Miguel and Gerard Roland, economists at UC Berkeley, examined bombing patterns in Vietnam and found that after a generation, the heavily bombed areas shared more or less identical economic indicators with areas subjected to far less or zero bombing.

So what, in particular, might we expect Iraq's postwar economy to look like in another generation? Austan Goolsbee proposes some answers to these questions in his latest New York Times column. Citing the Miguel-Roland study and others, Goolsbee suggests that the devastation of war, in and of itself, will have minimal bearing on Iraq's prospects for economic recovery. Instead, he argues that Iraq's artificial borders pose the biggest threat to prosperity because they force a contentious mix of ethnic and religious groups to live within the same national boundaries. Read Goolsbee's column to learn more about obstacles to economic recovery in post-war Iraq.

1. Miguel and Roland found no links between the intensity of wartime bombardment and long-term economic performance. What comparisons did they make in order to arrive at this conclusion?

2. The absence of a link between wartime devastation and economic stagnation does not suggest that war is "good" for the economy. Sure, spending during wartime and reconstruction can temporarily accelerate growth, but what are the opportunity costs of going to war or rebuilding afterwards? That is, what do nations forgo when they devote resources to war? Here's an archived entry about the costs of war.

3. Wartime destruction may not create long-term obstacles to economic prosperity, but history does raise some red flags about Iraq's borders. Consider the "Artificial States" hypothesis of economists Alberto Alesina, Janina Matuszeski, and William Easterly: National borders that (1) divide ethnic groups into separate countries or (2) appear unusually straight on the map typically enclose lots of internal ethnic and religious conflict. According to the column, what are the differences between natural and artificial borders? How are the post-war economic recoveries of Japan, Europe, and Vietnam consistent with the "Artificial States" hypothesis?

4. Although more straight-edged than some African nations, the British-drawn Iraqi borders surround a volatile mix of ethnic (Kurd and Arab) and religious (Sunni and Shia) divisions. According to Alesina, in what ways do ethnic (or religious) conflicts divert resources from the pursuit of economic prosperity? How is Iraq's mineral wealth likely to affect its internal ethnic and religious strife? Natural resources and governing institutions are two of the many determinants of economic growth. What does the "Artificial States" study suggest about the relative importance of each?

5. Given the evidence from the "Artificial States" study, what policies, if any, might moderate the internal strife of artificial states? Consider migration policies and the constitutional provision of authority among regional and national governments.