Economics of War

This is a Sunday post, so any of you who are expecting a funny post should surf away while you can. From now on, Sundays are for people who like to “think about stuff.”

Lately I’ve been wondering if some creative economist could come up with a formula for quantifying the likelihood of war. For example, it seems to me that the odds of going to war are far less if the leaders of both countries are fluent in English. I don’t know that for sure, but it’s the sort of factor that could be researched and made part of the larger formula, assuming any correlations could be found.

Likewise you could study the odds of one nation going to war with another country where the people are the same religion (mostly) versus not. And then there are correlations like the famous “McDonalds theory” that says there are never wars between two countries that both have McDonalds franchises.

The most interesting input would be a measure of how much the citizens of one country value the lives of their own people versus the lives of others. For example, if I asked you how many Elbonians you would be willing to kill to save one person in your own country, could you give me an answer? I think you could, if Elbonians were real. And from your answer plus a polling of your countrymen I could calculate a national average.

It’s just a hunch, but I suspect that war doesn’t happen until the stronger country (the one that usually starts the conventional part of the war) arrives at some magic ratio of the value of enemy lives versus their own people.

For example, a typical American might be willing to kill three Spaniards to save one American, even though Americans have no beef with Spain. And perhaps Spaniards would feel the same about Americans. It’s just a natural desire to protect the people closest to you. But a 1-to-3 ratio would be too low to predict a war. You probably need something closer to 1-to-1,000 before things get dangerous.

Once you determine the major factors in predicting war, you can weight them appropriately and come up with a prediction of risk. Here’s an example of weights, but I’m just making these up for example:

One country is harboring or aiding terrorists (+2)

The countries have a border in common (+5)

Both countries have a nuclear weapon (-10)

There’s a dictatorship in at least one of the countries (+10)

The countries have different majority religions (+5)

Both countries have capitalist economies (-10)

The stronger side believes it can’t start a war without losing an unacceptable ratio of its own people to the enemy’s (-5)

Both countries have leaders who speak English (-5)

One side has a clear economic, security, or religious incentive for war with the other (+5)

Using my hypothetical weighting system, the USA and the UK have a score of -30, and no chance of going to war with each other. The USA and North Korea have a score of 0 – right on the fence – assuming you count the DMZ as a common border, given that lots of armed Americans live near it, and assuming the North Koreans do have working nukes. To avoid war, Kim Jong-il and President Bush both need to learn fluent English. Or perhaps we need to make sure the economics of war are worse than the economics of avoiding it.

The usefulness of this sort of formula – assuming a more realistic one could be designed – is that it can make clear to all parties where the real problems are. There is something powerful about knowing exactly the nature of the problem and the risk of war it presents. For example, if North Korea knew that giving nukes to terrorists clearly tipped the formula toward war with a superpower, and the entire world would agree because the formula indicated it, they would have more incentive to be good citizens than if the consequences of their acts were more ambiguous. It minimizes the risks of wishful thinking and bad judgment and underlings who are afraid to give an opinion lest they be executed.

The formula also takes ego and pride out of the equation. We no longer need to sit around debating whether the real problem is the way someone is making the argument, or the way people feel, as opposed to the objective facts of the situation. All of the “feelings” part of the equation would be quantified in the ratio of the value of enemy lives versus your own people.

This is my bid to win both the Economics Nobel and the Nobel Peace Prize. I see no reason to settle for one.

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