In the Agora: The Costs of the Iraq War

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May 09, 2007

The Costs of the Iraq War

My brother sent along a feature from the Boston Globe jumping on the latest figure for the costs of the Iraq War through September: $456 billion. What would that buy? Among other things,

Almost 3,000 luxury high schools
Thirty Big Digs
Free gas for everyone for 1.2 years
Converting every car in the U.S. to use ethanol
14.5 million free-rides at Harvard
One year of Medicare
Five-and-a-half years of feeding and educating the world's poor

And this is only for what we've spent so far (on the American side). The true cost is much higher.

The National Bureau of Economic research sponsored two studies last year that provided estimates of the true cost of the Iraq War. Gary Becker reviewed these and concluded that a reasonable mid-range estimate for the cost is "between $500 and $850 billion, taking account of the loss in life and injuries." As we're approaching the lower end of that range based upon appropriations alone, a thirteen-digit total seems possible (depending on what happens after the surge). We're likely to see ever more fantastic opportunity costs like those mentioned in the Globe feature.

Except that the alternative to invasion was never massive public works. One of the NBER studies (Davis, Murphy, and Topel) also estimated the costs of continuing with containment, our pre-invasion policy. They provided a net present value (inflated for which year, I don't know) of between $300 and $700 billion. At the high end of that range, the total bill for the war will have to be around $1.2 trillion in order to justify the Globe's laundry list. That doesn't make it any less astonishing, though.

Posted by Zach Wendling at May 9, 2007 09:14 AM

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White House Office of Management and Budget Director Mitch Daniels told The New York Times in an interview published Tuesday that such a conflict could cost $50 billion to $60 billion

Posted by: Gregory Travis at May 9, 2007 11:18 AM | permalink

What is the cost of not having the Iraq War?

Posted by: Alan K. Henderson at May 10, 2007 06:27 PM | permalink

Alan, perhaps you should read a recent post of mine that answers that very question. It is, surprisingly enough, the one to which these comments apply.

Posted by: Zach Wendling at May 10, 2007 06:30 PM | permalink

I was asking about cost in broad terms - to put it simply, what bad stuff happens if we pull out.

Posted by: Alan K. Henderson at May 12, 2007 03:13 AM | permalink

May 09, 2007

The Costs of the Iraq War

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