« Econometricians Are *Not* Saintly Automatons | Main | FRBSF: Did Quantitative Easing by the Bank of Japan Work? »

Saturday, October 21, 2006

The Cost of the War for Iraq

We've seen estimates of how much the Iraq war has cost the U.S., but what has been the cost to Iraqis?:

An Early Calculation of Iraq’s Cost of War, by Anna Bernasek, Economic View, NY Times: Here's a basic question: What has been the cost of the Iraq war for Iraq? ... Although several studies have dealt with the war’s cost to Americans, there has been no comparable work addressing the cost to Iraqis.

Of course, the loss of human life has always been evident. Recently, the United Nations estimated that 100 Iraqis were dying each day, on average, as a result of the war. .... A recent study in The Lancet, the British medical journal, placed the average daily figure at about 500...

The economic cost has been less visible. Published information on the subject is very limited, although one economist, Colin Rowat, has made some preliminary calculations... Professor Rowat, a specialist on the Iraqi economy at the University of Birmingham in Britain, relied mainly on data from the International Monetary Fund to estimate the war’s overall effect on the Iraqi economy. His calculations are a work in progress, but what he has found so far is sobering: the cost amounts to a cut of at least 40 percent in Iraq’s national income. ...

Professor Rowat ... estimated how the economy might have performed had the war never happened. This ... estimate, of course, depends on a host of assumptions, as Professor Rowat would be the first to say. ... He readily acknowledged the difficulty of coming up with an undisputed set of figures; nevertheless, his analysis is at least a starting point. ...

Using Professor Rowat’s calculations, what might the economic cost of the war be for Iraq? If there had been no war, Iraq’s economy in 2005 might have amounted to $61 billion in today’s dollars, compared with the actual $37 billion, he estimates. That works out to a loss of $24 billion because of the war. Excluding foreign aid from the calculations, the loss estimate is around $30 billion.

Consider the more conservative figure, $24 billion. It amounts to a 40 percent cut in gross domestic product per capita...

While Professor Rowat’s calculations represent just one economist’s efforts to wrestle with extremely limited data, his work may encourage others to follow. Assessing the war’s economic cost for Iraq, of course, doesn’t provide an answer to whether the war is worthwhile in the long run. But it does provide a clue.

($24 billion) + (600,000 lives lost)*($x per life) = $?????. And if you think 600,000 is too high and you are one of the people nitpicking this estimate, would a very conservative estimate of the death toll of, say, half of that (which is outside the 95% confidence interval) make you feel much better about the cost of the war to Iraqi citizens? No matter how much these estimates are refined and qualified, they indicate the toll has been substantial.

    Posted by on Saturday, October 21, 2006 at 03:56 PM in Economics, Iraq and Afghanistan | Permalink  TrackBack (1)  Comments (16)

    TrackBack

    TrackBack URL for this entry:
    https://www.typepad.com/services/trackback/6a00d83451b33869e200d834618cae69e2

    Listed below are links to weblogs that reference The Cost of the War for Iraq:

    » War in Irak/Guerre en Iraq from Vincent Geloso et cie

    I know that I rarely touch the international issues even though I follow the news very closely. I do believe that International issues are to complex to be carried in a battle for passion . The complexity of these issues when mixed with passion only ... [Read More]

    Tracked on Sunday, October 22, 2006 at 04:22 AM


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.