The Economics of Roadside Bombs

Matthew A. Hanson ()

No 68, Working Papers from Department of Economics, College of William and Mary

Abstract: The U.S. military has been criticized for its failure to stop the Iraqi insurgency’s use of improvised explosive devices (IEDs), which have caused most of the Coalition casualties. We use an instrumental variables approach to estimate the insurgent responses to U.S. military countermeasures. We find that the number of IED attacks (including unobserved attacks) goes up when attacks are made more costly to conduct, suggesting that IED attacks are inferior and may even be a Giffen good. A major benefit of IED countermeasures therefore comes in reducing non-IED attacks. Evaluations of the U.S. military’s $13 billion counter-IED effort have thus significantly understated its success.

Keywords: Iraq War; Instrumental Variables; Substitution Effect; Inferior Goods; Giffen Behavior; Terrorism (search for similar items in EconPapers)
JEL-codes: C32 D74 H56 (search for similar items in EconPapers)
Date: Written
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