The Economics of Roadside Bombs
College of William & Mary Department of Economics Working Paper No. 68
19 Pages Posted: 12 Dec 2007 Last revised: 7 Feb 2008
Date Written: January 23, 2008
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 instrumental variables to estimate a microeconomic model of insurgent responses to U.S. military countermeasures. We find that insurgents increase the number of IED attacks when IEDs are made less effective, but that the insurgents' overall capacity to inflict damage decreases. These results suggest that a major benefit of IED countermeasures comes in reducing non-IED attacks, which decrease 2% with every 1% decrease in IED effectiveness. Previous evaluations of the U.S. military's $13 billion counter-IED effort, which have not included its causal impact on non-IED attacks, have significantly understated its success.
Keywords: Iraq War, Instrumental Variables, Income and Substitution Effects, Insurgency
JEL Classification: C32, D74, H56
Suggested Citation: Suggested Citation