Sep 09 2010
The Hidden Costs of War
Published by Joe Hauet at 12:22 am under Opportunity cost,Scarcity,Uncategorized
This past weekend, the Obama administration officially put an end to US combat in Iraq. Seven years after the invasion, both politicians and economists are looking back and asking themselves, was the invasion into Iraq and the ensuing occupation of coalition forces actually worth it. Or in economic terms, was the benefit of the war greater than the costs of fighting it.
What have been the benefits of the US being in Iraq? Have their indeed been any and if so how can we measure them? There are some clear explicit benefits that can be measured such as companies that have profited from the war as well as evidence of increased investment in the middle east due to the presence of the coalition forces. But there are also benefits that are hard to measure such as the creation of democracy, freedom or the removal of a ruthless dictator. On the cost side there are explicit costs for the war in Iraq such as the total amount currently spent by the US Government which is around 748 billion USD. Like the benefits there are also costs that are hard to place a number on such as the human cost with an estimate of over 100,000 total deaths, close to 4400 of which were Americans. For a more detailed look at these costs you can view the American Progress web site.
But as you know, economists do not only look at the explicit or obvious costs. In order to get a better understanding of the true costs of a decision, economists must look at the “could have beens” or the opportunity costs. In their recent article “The true cost of the Iraq war: $3 trillion and beyond” Nobel Economics recipient Joseph Stiglitz and Harvard Professor Linda Bilmes do just this. They calculate the costs of the war not only based on the explicit costs, but on the hidden ones. Several years ago, the authors estimated that the costs of the war in Iraq would eventually reach 3 trillion USD. This week, they claim that they may have underestimated the amount. The article states ,
Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict’s most sobering expenses: those in the category of “might have beens,” or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only “what if” worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe? The answer to all four of these questions is probably no. The central lesson of economics is that resources — including both money and attention — are scarce. What was devoted to one theater, Iraq, was not available elsewhere.
Economists believe that if we can get a sense of what the “true costs” of a decision are, then we can make a more rational choice when faced with a decision. Read the following two articles, the one quoted above by Joseph Stiglitz and the other entitled Iraq: Weighing the Costs and Benefits by Tim Kane and answer the following questions:
Questions
- Why is it important to look at the hidden costs when making a decision?
- In your opinion, what would be some of the opportunity costs associated with not invading Iraq? What are some that are associated with invading Iraq?
- In your opinion, is it possible to properly do a cost benefit analysis of a war? Are there some things that we cannot put a price on? Is it possible to use opportunity costs as “true costs” when they are essentially “could have beens”?
About the author: Raised in Japan, Joe was an international school student throughout his school years. He studied government and religion at William and Mary, and later economics at UNC Asheville. He has taught in North Carolina, Hong Kong and Switzerland. Joe now teaches AP and IB Economics at Zurich International School. Read more posts by this authorRelated posts:
1) The reason why it is important to look at the hidden cost when making a decission is because we all need good information to make decisions that is why consulting is an industry that never goes out of style. But paying for information can carry a hidden cost.
2)In my opinion the opportunity cost of invading would be foregoing the oppertunity to provide education to children in an african country. it wouldnt help resolve the conflict with what is happening in Iraq.
3) In my opinion i would say that it is not possible to do a cost benefit analysis of a war, because, in my opinion you wont know the other outcome, hence cant draw a conclusion on the cost benefit of war
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1.) It is important to look at the hidden costs because it can allow oneself to see more severe events in the future. It can also sway the decision that on makes based on the less obvious costs.
2.) What the US would forwent by invading Iraq would be the US having more troops in reserve, more attention and resources to Afghanistan, more attention towards problems in the US, more confidence in the Bush Administration. If the US did not invade Iraq, the opportunity costs would've been leaving a cruel dictator in power, future problems in the Middle East started by Hussein.
3.) No it's not possible. You can never put a price on a soldier's life and the freedom they allow us to have. You cannot put a price on the grief and worrying of the families of soldiers who have given it all up, and those still serving. It is possible because the "could have beens" are realistic situations if the US went on a different course.
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1) It is important to look at the hidden costs because we need to look at the costs and benefits in order to make a proper economic decision.
2) The opportunity cost of not invading Iraq could have two sides to it. One side could be a positive side, in which the US could have focused all their resources, materials, and military to Afghanistan, where there is a powerful extremist group in power called the Taliban, who are causing mass destruction in the nation and also in the Middle East. If the US did focus on the Taliban only, then there could have been more control over the extremist group and thus could have suffered fewer casualties. It is said that US, initially, invested $53 billion into the Iraq war and had to cut a minimum of $10 billion expenditure on Afghanistan. And according to the UN facts and figures, it is said that in 2004, 2005 and 2006, the US spent at least four times as much money in Iraq as in Afghanistan. The negative side of US not invading Iraq could have been that the powerful, cruel, dictator would have still been in control of Iraq and ruin the nation. A possibility could have been that his power could have spread around the Middle East causing future problems in that region, in which having peace could have been an impossible task.
3) In my opinion, it is not possible to do a cost benefit analysis of a war. Most of the things associated with the military cannot be priced. For example, you cannot put a price on a soldier's life. Life cannot be priced because life is extremely precious. If you loose someone in your life, there is no way that person can come back no matter how rich you are or how much you pay. You also cannot put a price on freedom as well. It is possible to use opportunity costs as "true costs" when they are essentially "could have beens" because all their opinions are based on realistic situations and ideas.
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1. The importance of looking at hidden costs is that it allows us to view the situation from all perspectives. By look at explicit costs only, it's not possible to make an accurate statement about the situation because the hidden costs are just as important.
2. The opportunity costs of invading Iraq would be the loss of thousands of troops and the fact that the troops were scarce and couldn't be in both Iraq and Afghanistan at the same time, even when Afghanistan needed more help to combat the Taliban and its effect on Afghanistan and its citizens. If the United States had decided not to sent their men to Iraq, but to Afghanistan instead, the severity of the problems Afghanistan has with the Taliban may not have been as relentless as they are today.
On the other hand, if the United States had decided not to sent their troops to Iraq, Iraq, and possibly the entire Middle East may still have been suffering under the rule of a cruel dictator, Saddam Hussein, which could have lead to even more diifficulties in the future.
3. I don't think its possible to do a cost benefit analysis of a war. You can't put a price on a soldiers life, on the life of a young innocent child who happened to be in the wrong place at the wrong time. You can't put a price on the effort put in and the lives lost. If a life is lost, no amount of money can bring that person back. Not only are lives lost in a war, but people are mentally scarred and may never feel safe again. It is possible because the could have beens are realistic predictions based on facts and figures that provide a general idea of what 'could have been.'
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1. It is important to evaluate the hidden costs that each situation bring so when a situation arises, like the war in Iraq, the people involved are able to calculate all the possible outcomes and effects before making a decision. By understanding the explicit and hidden costs, the best economic decision in any situation can be made.
2. The opportunity costs of invading Iraq would be the consequential loss of billions of dollars, resources, political and economic attention, debt, and the lack of support towards government decisions. By invading Iraq, not only did thousands of men and women risk their lives to defend their country in a war that wasn't a necessity in the first place, but thousands of them died. Some benefits may be clear (investment in the Middle East due to coalition forces, understanding of the situations at hand, etc), but these men and women were put into a situation that no one knew the potential outcome that could happen. Relating to the costs, as stated in article, 748 Billion dollars were spent on the war in Iraq instead of focusing on American's problems, such as the recession, universal health care, future bills and plans for the country, education ,etc. This spending is also a part of excessive debt the United States has (estimated in the low trillions and rising every second). Men and women were taken out of their jobs, causing jobs all across the country without someone to work in, and sent across to fight in the war. Also, by not invading Iraq, the troops could have been sent into Afghanistan, where members of Al Qaeda, including Osama Bin Laden has ostensibly been hiding for the past 9 years, and the Taliban have been prevalent.
However, the opportunity costs of not invading Iraq are all based on the "what ifs". For example, what if Hussein was still in power today and the effect that it could have had on the Middle East and Terrorism. By having the troops in Iraq no one really knows how much of democracy they have spread or the peace they've brought, but they did get a ruthless dictator out of control.
3. It is not possible to put a true cost or a cost benefit analysis on any war. No one can put a price on a life, or what it means to a family or friend to lose a loved one. You can't put a price on the potential democracy and peace that may result in the Middle East. You can't put a price on the terror and horrific events that soldiers, women, men, and children have witnessed and forced to be a part of.
However it may be possible to use the opportunity costs as "true costs" even though they're "could have beens" because they're predictions of other events that could have occurred, if one thing hadn't happened. They're based off accurate predictions through analysis of events and the effects of a situation which can give the best indications of the "true costs" of a war.
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1)It is important to look at hidden costs when making a decision as this could severely influence the outcome of an important economic decision. By looking at all hidden costs and what potential consequences may occur from them, a better economic decision can be made.
The main opportunity cost of the war in Iraq is that their resources could have been put to better use. Military troops were pulled out of Afghanistan, where the Taliban terrorize the nation, and were relocated to Iraq where the war was not as necessary as in Afghanistan. The death of thousands in Iraq could’ve also been prevented. Before tending to the problems of other countries, Bush should’ve also firstly taken care of the problems in his own country.
However, had USA not invaded Iraq, the opportunity cost could’ve been a cruel dictator running the country and possibly further problems in the Middle East.
In my opinion doing a cost benefit analysis on war is not possible as it is immoral to put a price on a soldier’s life. No amount of money can bring back a dead soldier or rid one of the traumas he suffered through war. It is possible to use opportunity costs as true costs as it is all based on accurate facts and realistic situations.
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1) It is important to look at the hidden costs because if you don't you could make the wrong decisions so you need to look at it from different perspective to come to the right conclusion. In this Iraq war for example, one must look at the "what ifs."
2) In my opinion the opportunity cost of the war would be the deaths of many US troops and a lot of money. Instead of sending their troops to Iraq they could have sent them to Afghanistan for a greater purpose, to help Afghanistan fight the Taliban. However if the US didnt send their troops to Iraq Saddam Hussein could have still been in power and the terror in Iraq would have still been happening.
3) I don't think a cost benefit analysis on war because you can't really put a price on people who died or suffered in the war. No matter how much money you have you can not bring someone back from the dead. It is possible to use opportunity costs as true costs because it is all based on realistic situations.
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1. It is important to look at the hidden cost because their are many possible perspectives and outcomes to one situation. In Iraq for example, one must not only look at the monetary costs of war but also the opportunity cost such as the cost of not entering the war and seeing what would have happened and the cost of the soldiers that had to be treated after the war. Only then is it possible to weigh and determine the benefits.
2. The opportunity cost of Iraq contains many things. For one the soldiers sent there could have been used elsewhere for example in Afganisthan or could have remained with their current job as a teacher which would have helped the country directly. Asso the 53 billion dollars spent on Iraq the first year could have been more useful helping the local economy or the government which also could have uesd the money to improve civil services.
On the contrary, the opportunity cost of not entering Iraq could have been Sadaam Hussein staying in power and could still tyranize and terrorize Iraq if not even much more.
3. It is very difficult if not impossible to do a cost benefit analysis on war as there are too many problems to consider that cannot be paid for. There cannot be a price on a fallen soldiers life or the problems the family faces at home worrying about their child's life.
One can look at "could have beens" as true costs because the risk of them happening could be extremely high or the consequences to great for them to be ignored such as the what if of Iraq still being in the hand of a dictator. Therefore some costs should be considered as true costs even though they are not for certain.
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1. Hidden costs are still costs. While they are not immediately visible to us like explicit costs are, they can still play a large part in determining the outcome of your decision. Time is a hidden cost which often gets overlooked, and which may require cost-benefit analysis to ascertain whether a decision is worth making or not.
2. The opportunity costs of not invading Iraq would include the following a) Saddam Hussein would still be in power and Iraq would be a tyrannical regime b) USA's position as global superpower and crusader of democracy would have been undermined. However, the opportunity costs of invading Iraq are as follows a) Resources and money were spent on the war which could have been used elsewhere. Soldiers could have been deployed instead in Afghanistan or used domestically in civilian work or civil projects. b) Dead soldiers represent dead human capital and/or entrepreneurship; perhaps a would be scientist or future entrepreneur died in combat.
3. It is very difficult to do a cost-benefit analysis of war. What is the price of a human life? What would the price of letting Saddam Hussein continue to reign be? These are abstract concepts and do not have a monetary amount connected with them. It is easy after the war to slap a price tag on it, but many of the opportunity costs associated with the Iraq War do not have a "true cost" that can be assessed in economic terms.
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1. Why is it important to look at the hidden costs when making a decision?
When making a decision hidden costs are a great factor, as if you just lightly make a choice then these hidden costs can snowball into a huge amount. which could potentially effect how much or how well you can produce something or as a house owner it could just effect your standard of living, making you pay more that you realised for some product or service.
2. In your opinion, what would be some of the opportunity costs associated with not invading Iraq? What are some that are associated with invading Iraq?
An opportunity cost with no invading Iraq is that the war in Afghanistan could be over already and not entering it's 10th year. Another is that an estimated 3 trillion could have been spent elsewhere and Saddam Hussein would still be in power of his oppressive regime in Iraq. The cost of oil would also be lessened as Iraqs production would not be so interrupted.
Some opportunity costs that are associated with invading Iraq are the loss of Human capital. The government expenditure of 3 trillion dollars that could have been spend elsewhere (okay so not quiet 3 trillion, but a few hundred billion for sure). Also the financial crisis which we are currently recovering from would not have hit as hard, or may be not at all.
3. In your opinion, is it possible to properly do a cost benefit analysis of a war? Are there some things that we cannot put a price on? Is it possible to use opportunity costs as “true costs” when they are essentially “could have beens”?
It is impossible to put an actually monetary cost benefit analysis on the price of a war. This is because there are factor that we cannot include in our estimate, there are could have beens and such but they not really applicable as true costs since we don't know for certain what would have happened. Also we don't know what the people that died could have done, one of them could have formulated a new form or reliable, reusable energy. We can say that it cost this much to produce these guns, bullets and explosives. The fuel cost this much and the tanks this, but we cannot truly put prices on many other things that are involved in war such as a human life.
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1. In order to evaluate a situation, we weigh our explicit costs (monetary) and our implicit costs (hidden costs). This enables us to examine the possible consequences that might arise in the outcome of a given situation, therefore scrutinizing both the direct and indirect costs lowers the chances of an unlucrative outcome, both explicitly and implicitly.
2. When evaluating this hapless situation, the unanswered question always arises, was invading Iraq worth it? In order to answer this question we must underline the rued opportunity costs weather or not we hadn't invaded it after all. Had the Americans not invaded Iraq, the country would still be under the rule of a ruthless dictator, America's globally admired status as the 'superpower' would not be as prevalent and lastly, although more controversially, America wouldn't have as much oil to pump our tanks. America sacrificed these opportunity costs, labeling as less significant than the opportunity costs of actually invading Iraq. Now that America has invaded Iraq, the trillions of dollars used on the military (which could of been donated to charity, yes, I have a kind side to me) were spent on weapons and the lost human capital with the employment of thousands of soldiers hasn't aided the 'circular flow' diagram in any way.
3. Doing a cost-benefit analysis of the war isn't easy. There certainly isn't an explicit cost for human life (mafiosi: don't argue with that point), there's no explicit cost to be put on a limp, old and languid ex-soccer-mom's head, waiting for her son to appear on her doorstep with an Iraqi ornament. Yes, one can say that the loss of life equals the loss of human capitol which ends up in an explicit cost, but human feeling has no price; a quintet of wise-men once said, "can't buy me love". When weighing the cost-benefit analysis of going to war, "true-costs" are impossible to evaluate, they're all virtually "could-have-beens", and looking at war, "why-did-I-do-that..s".
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1. Why is it important to look at the hidden costs when making a decision?
It is extremely important to consider the hidden as well as the obvious costs. These obvious costs are factors such as financial costs and firm financial gains; however, hidden costs are the obscured results from the matter. To avoid resulting in negative hidden costs, one must make an educated economic decision. This economic decision consists of weighing the opportunity costs of all option available, deciding what must be sacrificed in order to gain the most efficient and best outcome.
2. In your opinion, what would be some of the opportunity costs associated with not invading Iraq? What are some that are associated with invading Iraq?
Opportunity costs arise during every second of one’s life, and most dramatically during major events and decisions. If the Americans had not invaded Iraq, then that would dramatically influence the current economic situation. The main opportunity costs that one must consider are firstly that Saddam Hussein would still be marching dangerously on the streets. One must also remember that this would result in a possible nuclear attack or invasion. On the positive side, so many lives would not have been lost. Another result would be that many firms would financially be largely higher or at a loss. There would also be more labour among the markets, creating a larger quantity of production. Another result would be that America wouldn’t be focusing on making firearms and able soldiers; however they would be focusing on a peaceful route, creating consumer goods. Their focus on their market would increase their technology, increasing the quality, and efficiency. All this evidence proves that America may now have shifted their Production Possibility Curve outwards at a higher rate, if they hadn’t focused their effort on their safety. However, if they hadn’t resolved the safety issue then they may have been attacked and gone into an economic crisis.
For the good or for the worse, America did invade Iraq; after weighing all the opportunity costs of their decision. This decisions resulted in many thousands of lives lost; although, making it safer. This result also increased the economic growth in firearm and oil firms. On the other hand, because so many workers were removed from their previous jobs, the efficiency of the country decreased dramatically. Many organisations, such as schools, suffered badly because of the loss of staff. Most of the opportunity costs were hidden in these decisions, such as the productivity, staff turnover, low efficiency and many more.
3. In your opinion, is it possible to properly do a cost benefit analysis of a war? Are there some things that we cannot put a price on? Is it possible to use opportunity costs as “true costs” when they are essentially “could have beens”?
One may be asking, is it possible to analyse the opportunity costs of a war; I don’t believe so. It is not possible to properly do a cost benefit analysis of a war, mainly because one doesn’t know what the reaction of the victims will be. Although one can assume that the victims will respond, one doesn’t know to what extent. Many factors in the economic market can be estimated, but never exact fact. The reason they can’t be counted as “true costs” is because opportunity costs are generally logical sequences of events that follow one alteration or event. These sequences are possible to estimate, but one can never know for sure that it will become true.
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1. It is important to look at the hidden costs because it shows you the deeper picture of the situation therefore creating awareness of the decision to be made. Making a decision such as whether to enter a war or not can never be made without the underlying factors.
2. If the USA did NOT invade Iraq then the opportunity costs would have been that the government would have had more money to invest in public goods and services, such as health and education for the USA. But negatively this would have hindered Iraq and the Middle East due to the extremist groups taking control.
3. I feel that it is impossible to do a cost benefit analysis of a war because there are thing that cannot have a prise put on them. You cannot put a prise on things such as a war because it's hard to say how much of it will actually go to plan. Also you cannot put opportunity costs as true costs because you can put a prise on things like guns, bullets and etc but a human life cannot have a actually prise put on it. And even thought the "could have beens" could changed the prise of things it still cannot affect the bigger things like a life or the initial cost of a war.
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1. Looking at at the hidden costs is quite a crucial step in a good economic decision. When making a good decision you want to be able to minimize and limit the cost of your choice ; therefore you can take a good look at situation costs and from there make your decision.
2. What were the pros and cons of invading Iraq ? You always have to think in an unbiased and double sided way when approaching a question and issue such as that one. The opportunity cost of invading iraq were getting rid of Sadam Hussein and using resources in a better way. On the other hand, if the U.S haden’t invaded Iraq, Hussein would have stayed in power, soldiers could have been used somewhere else, and above all no deaths would have taken place.
3. In my opinion, there is no way in which you can accuratly calculate the cost benefits of the war. I don’t quite think you can match the cost of someones life or their love for their family and friends. I don’t think the wife of a soldier, despite how much money she could get from the governement, would ever be as happy as she was again. In my opinion it is quite possible to use opportunity cost because all the other alternatives are quite realistic and could have taken place instead of the war.
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