More Economics of Terrorism


Despite having spent a good deal of time in graduate school looking at this very issue, I realized only recently that I hadn't been blogging much about it. Perhaps it's that I was worried that if I started, I'd just never stop, as I am wont to do with so many things.

But now, via Mahalanobis I see that Corner Solution has put up a couple of thoughts on the issue. Dochia has listed some interesting papers, and you should check out the trackbacks there as well. All interesting stuff.

The only problem is, I'm not buying it. Well, that's a bit much. How about I say, I'm incredibly skeptical of what's been mentioned so far. In specific, the supply and demand analysis of terrorism might be interesting, but it's not very helpful. I'm all for applying the lessons of economics to understanding terrorist groups, and do think there are some insights from institutional econ that would certainly be of use in understanding the functioning of such groups.

But here's my basic problem: terrorism is, by and large, becoming synonymous with suicide terrorism. (Caveat: the number of political kidnappings in Iraq will necessarily affect this, though it's been tracking in proportion with suicide bombings so I don't expect the ratio to be changed much.)

Here's the catch, then: suicide bombers die. Which, by definition, includes a cessation of all benefits from being a living person who is evetually going to be a martyr (Iannacone explains some of the gains from being seen by a religious group as someone that devoted to the cause; recognition, stature in the group, not to mention the physical benefits often awarded to families of suicide bombers like cash transfers, free housing, free education, etc.). To abstract these benefits for the moment, let's just call it utility. Why would someone choose to end the stream of utility gains by choosing to die? Perhaps the individal is other-regarding enough that the improvement of someone else's life is enough to believe that ending their own is worth it. Or maybe they're just crazy. None of these, however, are easily dealt with in the economic literature I've read. At least not directly.

Belonging to groups, as numerous people point out, confers significant utility to the member in a number of ways. Membership and the desire to fit in can drive a large number of behaviors. But why, then, would one choose to end that association through suicide? It's not that it doesn't happen regularly, so there must be some answer. However comparisons to other extremist groups that have resulted in group-suicide are problematic to me. The pressure from a group that is all doing the same thing at once (or in groups -- think Jonestown) exerts a very different pressure than getting an individual to perform an act where there are no others around. Seeing that your group is about to disappear, you may well be induced to drink the Kool-Aid. Walking alone into a crowded marketplace with dynamite strapped to your chest and no familiar faces around, it would seem, loses some of the direct peer-pressure effect.

Terror "firms" are interesting to consider, but of vital importance then is the idea of recruiting into the suicide bomber ranks. Supply and demand can potentially address why terrorist groups persist, why they use suicide bombers, why they're structured the way they are, and more. But I don't see that it addresses how you convince someone to stop being with a wife, children, friends and the religious community.

My answer? Two parts; the person is bored, and he or she likes killing people.

Taken in reverse order, some of this is semantic. By "likes", I mean that we should consider that utility is derived from the death of others. Think of yourself as a soldier in war, choosing killing over death. This utility isn't "pleasure", but rather the gains that come from having fewer people in the world looking to kill you. Even if the threat is only perceived, it's still a utility gain to see that those you think COULD be seeking your death are diminished in number. Some religious groups, or more accurately terrorist groups that use religious iconography and messages, teach to their members from the earliest age that their targets are enemies, and that the situation is tantamount to war. Killing the other side's soldiers in such a case is a useful activity and could, potentially, convey utility. So, when faced with asymmetric force structures, the person seeking to kill as many of the other side as possible will have to choose methods such as suicide bombing.

But still the question arises, why not just kill from afar, and live a long life gaining more and more utility along the way as the number of deaths increases? That's the boredom part.

Despite good evidence to the contrary, people still insist on claiming that poverty causes terrorism. What the authors of the linked study do find, instead, is that downward movement in economic position may well incite people to participate in terrorism. But they need not be moving from prosperity to poverty. Instead, I think, this is an indication that people's view of the future is a heavy indicator for potential participation. That is, the contributing inputs to discount factor of the individual as it pertains to their future stream of utility might be a big determinant in choosing suicide over living.

With stagnant or declining economic situations people may have little reason to believe that the future holds much worth or reward. Even those who would qualify as "middle class" (a highly relative measure, but let's go with it for now) could discount the future value of income/utility enough to believe that the future is bleak, at best. In a place where there are few jobs, and the jobs that are present are laborious and unchanging (the economy of Palestian territories has changed little over 30 years; or compare the incidences of terrorism in the economies of some former Soviet sattelite countries during the same time period) there may be little reason for hope.

With nothing to do and no reason to believe that things will get better (boredom) and a belief that killing the enemy could help (liking to kill), perhaps suicide bombers are rationally choosing suicide over living? Of course, the utility from killing needs to come in the moments before death, and there is a need to assume that the bomber believes his or her action will create change. So, it's not clean by any means, but so far it's the best that I've got.

(NOTE: This is done quickly during work hours, so I may update or refine later.)


I'm still partial towards RAND's analytical/historical method of collecting data on actual, specific acts of terrorism as a basis for understanding terrorist organizations.

It's not that I don't buy other analyses; it's jsut that they usually leave me asking, So What?

In fact, I find most application of rational choice in this area cute but worthless as a tool of understanding terrorism, or a guide to practical collective action.

For what I think is useful, see Bruce Hoffman's 2003 dissection of offical and popular perceptions of the terror threat. Some of the older stuff and newer stuff is useful as well.

Looks interesting. Thanks for the pointer.

Tangentially, this makes me think of something else that I kept running into when reading this literature.

When can you say are you doing "economics" vs. "political science"? Frankly, when can you say you're doing "economics" and not "statistics"? I've been in plenty of paper presentations when the only things from any of my econ classes that appeared were the words "income" and having to know what people meant by "marginal". The rest of it was entirely understandable by someone who had never spent a day in an economics class. Not that the subject should try to keep non-economists from understanding the work!! I just wondered, staring at pages and pages of tables showing results from every one of the models someone had run...where did the economics go, again?

A professor of mine did a paper on terrorism that was basically the application of basic statistics, but it was clear that he was engaged in a "political science" sort of exercise since it was all couched in traditional terms and information that assumed a basic knowledge of current international relations theory. I don't know if that's better or worse (opinions on Poli Sci aside).

I didn't bother putting in my solution to the whole terrorism mess: forced economic development.

I'm not entirely serious with that, but if we're going to march something in at the barrel of a gun, it would do everyone a service if we were making populations build stores, hospitals, machinery plants, etc.

If people have something to lose, like decent jobs or the possibility of a future, I'm betting they won't be as ready to put on exploding vests.


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This page contains a single entry by published on October 4, 2004 11:23 AM.

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