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The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict

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  • Linda Bilmes

Abstract

Many aspects of the Iraq venture have turned out differently from what was purported before the war: there were no weapons of mass destruction, no clear link between Al Qaeda and Iraq, no imminent danger that would warrant a pre-emptive war. Whether Americans were greeted as liberators or not, there is evidence that that they are now viewed as occupiers. Stability has not been established. Clearly, the benefits of the War have been markedly different from those claimed. So too for the costs. This paper, in two parts first provides an estimate of the 'direct' expenditures, and provide adjustments to reflect the true social costs of the resources deployed. The second provides an estimate of the macro-economic costs; the effects of the War on the overall performance of the economy, taking into account both the effects of the expenditures themselves and of the increased price of oil, some of which at least should be attributed to the War. Americans could, and should have asked, are there ways of spending that money that would have enhanced our long run well being—and perhaps even our security—more.

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  • Linda Bilmes, 2006. "The Economic Costs of the Iraq War: An Appraisal Three Years After the Beginning of the Conflict," Working Papers id:387, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:387
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    2. Samer Matta & Simon Appleton & Michael Bleaney, 2019. "The Impact of the Arab Spring on the Tunisian Economy," The World Bank Economic Review, World Bank, vol. 33(1), pages 231-258.
    3. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
    4. davis, peter & Clerides, Sofronis & Michis, Antonis, 2010. "The Impact of the Iraq War on US Consumer Goods Sales in Arab Countries," CEPR Discussion Papers 8041, C.E.P.R. Discussion Papers.
    5. Hans Gersbach & Philippe Muller & Oriol Tejada, 2015. "Costs of Change, Political Polarization, and Re-election Hurdles," CER-ETH Economics working paper series 15/222, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Stergios Skaperdas, 2011. "The costs of organized violence: a review of the evidence," Economics of Governance, Springer, vol. 12(1), pages 1-23, March.
    7. Gardeazabal, Javier, 2010. "Methods for Measuring Aggregate Costs of Conflict," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    8. Cooper, Christine & Catchpowle, Lesley, 2009. "US imperialism in action," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(6), pages 716-734.
    9. Ryan D. Edwards, 2010. "A Review of War Costs in Iraq and Afghanistan," NBER Working Papers 16163, National Bureau of Economic Research, Inc.
    10. Riccardo Natoli & Segu Zuhair, 2011. "Measuring Progress: A Comparison of the GDP, HDI, GS and the RIE," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 103(1), pages 33-56, August.
    11. Patricia Justino, 2009. "The Impact of Armed Civil Conflict on Household Welfare and Policy Responses," Research Working Papers 12, MICROCON - A Micro Level Analysis of Violent Conflict.
    12. Chwastiak, Michele, 2008. "Rendering death and destruction visible: Counting the costs of war," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 19(5), pages 573-590.
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    14. 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.
    15. Geys, Benny, 2009. "Wars, presidents and popularity: The political cost(s) of war re-examined," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2009-11, WZB Berlin Social Science Center.
    16. Douch, Mohamed & Essaddam, Naceur, 2011. "Short and Long-Term Effects of September 11 on Stock Returns: Evidence from U.S. Defense Firms," MPRA Paper 46529, University Library of Munich, Germany, revised Mar 2013.
    17. Chad R. Wilkerson & Megan D. Williams, 2008. "How is the rise in national defense spending affecting the Tenth District economy?," Economic Review, Federal Reserve Bank of Kansas City, vol. 93(Q II), pages 49-79.
    18. Joseph Mawejje & Patrick McSharry, 2021. "The economic cost of conflict: Evidence from South Sudan," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 1969-1990, November.
    19. Timothy Mathews & Anton D. Lowenberg, 2012. "The Interdependence Between Homeland Security Efforts of a State and a Terrorist’s Choice of Attack," Conflict Management and Peace Science, Peace Science Society (International), vol. 29(2), pages 195-218, April.
    20. 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.
    21. Zac Reynolds & Daehoon Nahm & Craig MacMillan, 2022. "Compensating Wage Differentials for Job Fatality and Injury Risk in Australia," The Economic Record, The Economic Society of Australia, vol. 98(321), pages 152-165, June.

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    More about this item

    Keywords

    Iraq; weapons of mass destruction; Al Quaida; Costs of war; West Asia; US; International Affairs; US Foreign Policy; US-Iraq;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies

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