Editorial
The Economics of Suicide Bombing
by Fred E. Foldvary, Senior EditorCan we apply economic theory to suicide bombers? Yes, because every human act is economic. Those who become suicide bombers make a choice, which involves costs and benefits, and this can be studied from the economic point of view.
Economics is based on normal, rational human action, so if suicide bombers are irrational, crazy, and deranged, an economist can say nothing about them; we send them instead to the department of abnormal psychology. But in fact, sociologists who have studied suicide bombers conclude that these are normal, rational persons, not crazy or desperate. Indeed, if one wants to hire a suicide bomber, one does not want a crazy person, as he may not follow directions.
Professor Laurence Iannaccone at George Mason University has specialized in the economics of religion, and wrote an article on The Market for Martyrs. Iannaccone examined suicide bombing from an economic point of view, seeing a supply and demand for such acts. Organizations that conduce such acts of terror can be regarded as firms. So the economic theory of firms and supply and demand apply to suicide bombings just as it does to any other human action.
Iannaccone concludes that what limits suicide bombing is demand, not supply. There is an ample supply of persons willing to sacrifice themselves for a cause. Indeed, we regard sacrifice as normal when our country goes to war and citizens volunteer to join the army. It only requires a few suicide bombers to cause terror, and there is a supply, mostly young men, who are willing to die for a cause. Propaganda instills a hatred for an enemy who is regarded as the cause of the suffering of their tribe, and religion often plays a big role in promising a reward in the afterlife. Suicide bombers get honor, praise, and high status, rewards they could not get otherwise.
The demand for suicide bombing comes from the 'firms,' terrorist groups whose leaders feel hatred and anger toward the enemy target and have a desire for revenge. This sentiment is shared by many of the people in that community, such as Palestinians or Iraqis, so they too are demanders. The fact that the violence is counter-productive, only making the oppression worse, does not matter, since the demanders feel glad when the enemy is hurt, even if they get hurt too.
There is therefore a 'market' for martyrs, with a supply and demand, and firms which organize terrorist suicide bombing. Iannaccone concludes that the way to reduce suicide bombing is to attempt to reduce demand rather than supply. The situation is similar to illegal drugs. Much of the 'war on drugs' is a futile attempt to limit supply, but that just drives the cost up while doing little to reduce the quantity, since the quantity demanded is rather unresponsive to changes in price. Similarly, attempts to reduce the supply of suicide bombers, such as by killing the perpetrators, drives up the price while not doing much to reduce the activity. Of course those who are about to inflict damage should be stopped, but simply killing the participants will not stop the suicide bombings, since those who die will be replaced by others.
To reduce the demand for suicide bombing, the market conditions need to be altered. Consider the Arabs who are citizens of Israel. They do not engage in suicide bombing, while Palestinian Arabs in Gaza and the West Bank aspire to be bombers. Why the difference? Because Israeli Arabs have much more economic opportunity, and they don't feel as much resentment, anger, grievance, and hatred toward Israelis. So it is not culture or religion that is the key difference, but the economic and political environment in which the people live.
Poverty by itself does not cause violence, but poverty combined with a sense of humiliation, defeat, injustice, and outrage against human-rights violations are a potent source of the demand to inflict damage on the hated occupier and violator. U.S. action in Iraq, for example, has exacerbated the demand to inflict damage on Americans. Thousands of Iraqis have been killed, and they have no self-government, little economic opportunity, no security, and now they see the humiliation and pain inflicted on Iraqi prisoners, many of whom are innocent of any crimes.
Besides treating the prisoners humanely, the U.S. and British administrations should cease the occupation by transferring power to local elected councils. The occupiers should tell the Iraqis directly, 'I did wrong. I am sorry.' The coalition troops should be respectful of the local culture, such as asking permission from the husband if his wife is to be searched for weapons. They should promote local economic development.
The billions of dollars being wasted could instead be used to hire all the unemployed to do security and repair work. The income tax imposed on Iraq should be repealed, and Iraqi newspapers should be free to publish what they want, even if it is anti-American. Iraqis who cooperate would be rewarded with jobs, votes, and safety. There would be an economic and political substitute for violence.
Israel could have eliminated the demand for suicide bombing if it had promoted democracy and economic prosperity in the newly occupied territories after 1967, and if the Israeli settlers had to purchase land or pay rent to the Palestinians in exchange for excluding them from territory previously used by Palestinians. Instead, the Israelis disrespected the Palestinians. Israeli policy now is mostly applied to the supply rather than the demand for suicide terrorist bombing, and so the terror continues. The refusal to understand and apply economics has a heavy price.
Economic theory can help us understand many activities that folks usually don't think of as economic. When we understand that all human action is economic, and is subject to the laws of supply and demand, then we gain a better understanding of how to change bad outcomes.
Copyright 2004 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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