The Costs of War

A trove of military documents about the Afghanistan war made public by WikiLeaks and turned into journalism by The Times, The Guardian, and Der Spiegel will surely bring renewed attention to that war. (A side debate: these are the Pentagon Papers of our time; no, they’re not.) We’ll be hearing a lot about the various costs of this war and the Iraq war — the financial, political, and human costs, at the very least.

Along the way, it might be worthwhile to consider “A Review of War Costs in Iraq and Afghanistan,” a new paper by the economist Ryan D. Edwards (abstract here; PDF here):

As of this writing, the wars in Iraq and Afghanistan are in their eighth and tenth years, having accrued nearly a trillion dollars in direct military costs. I review the history of cost forecasts for these ongoing engagements, highlighting the differences across them in scope and accuracy, assessing the methods and practice of cost forecasting, and exploring the implications of the war costs themselves. Besides the unanticipated length and breadth of the military conflicts themselves, a related and equally important component of costs is the life cycle of costs associated with caring for veterans. The forecasts we have of such costs imply high levels of public spending per veteran and very high levels of costs associated with pain and suffering per veteran, as high as 10 to 25 percent of lifetime wealth. I also discuss the methods and motivations associated with war cost forecasts by comparing them with other types of aggregate forecasts, which are prone to similar types of errors. The history of war cost forecasts suggests that increasing their frequency and transparency may improve their usefulness in guiding policy.

Eric M. Jones

Wait a minute....did I fall asleep and wake up stupid, or is WAR always open-ended regarding cost? Am I missing something? What if we lose...what is the cost then?

This is sort of like--A "battle plan"-- being the starting point for an event that has no set course and cannot be "planned".

How do I get a job where anything I say will be wrong and I will still be paid and respected? War is all a racket.

Ian Kemmish

If one considers the World Trade Centre "spectacular" to be the opening shot in the latest Afghan war, then surely the tenth year in that war cannot begin until that event's ninth anniversary - still some time away?

Such a schoolboy error right at the start of the abstract disinclines one to read the rest of the paper. How many other figures in it have been casually inflated? Life is, sadly, too short to double-check....

John V. Karavitis

John V. Karavitis I have read "Freakonomics", and absolutely enjoyed it. A great book, very eye-opening. Thus, it was with no small measure of delight that I came across this blog. I have an issue with the very first post that I read - the one above. In partcular, the very last sentence, which reads: "The history of war cost forecasts suggests that increasing their frequency and transparency may improve their usefulness in guiding policy." I'm sorry, but, as much as I think we've wasted too much time and money already in Afghanistan (as many an other nation has come to realize, all too late), I disagree that "increasing...transparency" is a good thing, especially since we would be "transparent" to the very people we would be fighting. Imagine Osama bin Laden getting his daily intelligence reports from WikiLeaks! Unthinkable! John V. Karavitis

J.P. Steele

Stiglitz & Bilmes...........first...then accessorize!


Perpetual war keeps my job with the Veteran's Administration least until we start to villify our vets as leeches and slackers, just like we do with the poor, disabled, and elderly now.

We don't need to publish detailed balance sheets to achieve transparancy, but at least let us know the actual dollar amounts and see the caskets arriving home. And who exactly is lending us the money, and at what rate?

James Wynn

Eric M. Jones is spot on.

1) Unless one is willing to lose if he has not won by some predetermined date, he cannot know in advance the cost of a war.

2) No one can accurately determine the cost of so-called Peace. Consequently, this information will be, always and solely, propaganda for unqualified pacifism, appeasement, and dithering in the face of a growing threat.


the only real cost of the invasion is to the occupied country- they will have their civil society and infrastructure gutted- it took vietnam @ 30 years to pay the bill, and afghanistan never recovered from the soviet invasion- imagine if we were honest and told the iraqis that we will kill saddam in exchange for 30 years of destroyed civil society- what would they choose (presuming we obey the law of sovereignty)?


You are being ungenerous I think. Perhaps a bit schoolboyish yourself?

As this is an article about to be published it is probably not intended to be read for another few months. As of September 12th the statement will be technically true, so really you are making a big fuss over about 45 days, 45 days the author may have even assumed would have passed before anyone read the piece.

Obviously it would be better if he had phrased that differently, but I hardly think it casts the whole piece into doubt. I have seen much graver errors in abstracts for excellent papers.


Wars are so economically stupid. Lets destroy stuff/people! I guess if it benefits the correct small subset of people that is enough.

Too bad decision making isn't more utilitarian and less political.

Drill-Baby-Drill Drill Team

How much does war cost? Ans: How much have you got?

The Europeans have until recently been waging war for generations with each other. The French hate the British. The British hate the Germans, They all resent the Spanish sucess. Napolean, Bismarck. Hitler, DeGaulle--all violent nationalists who loved war and conquest. They even had a 100 year war.(but it was more like 120 years).

Sometimes I think the Neutron Bomb is a good start for the Arab-Israeli Peace. They have been in an intermittent chronic hateful war for 50 years, and look for another round of 50 more years. If you want to live forever, link your death to the achivement of Middle East Peace--you will be Methusallah.

Sometimes we need a giant red reset button--clear all the players and make room for newer ones. Video games are so right sometimes.


Has anyone seen a good estimate of the percentage of the war costs that flows back to the US? Soldiers send a lot of money back to the US to their families. Tanks, planes, etc. are bought from the US.

A war ist always a stimulus for the economy.

General Kafka

Josh & Ian: in your first year, you are not one year old.

you begin your 2nd year when you reach 1 yrd old. Ever thought of that ?
The Afghanistan's first year was 9/11/2001-9/10/2002.
Hence, on May 2010, it is in its 10th year.

There is no year 0, there is 1 BC and 1 AD.

Such a irrelevant fuss on an incorrect premise. I am glad some people can handle the math.


Ian. Right on. The real cost is, as in this paper, from diminshed productivity of the injurer and dead and diversion of resources in caring for them. Then,there is the energy and other resources (eg, precious metals) consumed. Mostly there are wealth transfers: payment of leases to allies, inflated costs from reckless spending/over spending.

Also, most research doesn't look at the economics, it looks at the finances. They're not the same. The benefits of war are generally decades out, where models become meaningless. It also doesn't consider that the gain are not necessarily realized by the country doing the spending.

Think of Iraq. Saddam bullied it's neighbors with an implied threat. Cost were far beyond the cost of any attack he could carry out. The uncertainty was more costly than actual threat. He depressed the developement of the entire region for several decades. Witness all the construction that happened after the regime fell. Globally, the war in iraq will likely be a net economic benefit, though the US may not recover the value of the lives and resources lost.

And, most of the spending is spending that is done in the US. It is fiscal stimulus.

Also, the war happened during a down economy. In addtion to the fiscal stimulus, we train many young workes and instilled a work ethic. The down economy hit the young especially hard and would have other destroyed much potential capital had they been left to flownder on their own.



Oops. Meant for egghat, not Ian.