What Makes a Terrorist: Economics and the Roots of Terrorism.

What Makes A Terrorist: Economics and the Roots of Terrorism, by Alan B. Krueger, Princeton: Princeton University Press, 2007

The question in the title gained new urgency after September 11, 2001. Why were we attacked? Who were the people behind this tragic event? The popular theory or "common wisdom" linked poverty and poor education with political extremism and terrorism. Political and intellectual leaders from around the world have spoken in favor of reducing poverty in order to eliminate the cause of terrorism. Unfortunately, there has been no scientific evidence that this linkage is true.

After the London subway bombings of July 7, 2005, this question experienced resurgence in England. Alan B. Krueger, Bendheim Professor of Economics and Public Policy at Princeton University and an advisor to the National Counterterrorism Center, was invited to prepare three lectures, originally presented as the Lionel Robbins Memorial Lecture Series at the London School of Economics on February 21-23, 2006, that became the basis for this book. Krueger is an accomplished labor economist who has used careful systematic analysis to deflate previous "pop theories" regarding the effects of raising the minimum wage in his work with David Card, Myth and Measurement: The New Economics of the Minimum Wage (1997). His analysis in this book should also make policy makers sit up and take notice.

In the first lecture, Krueger asks, "Who becomes a terrorist?" In general, he shows that the people who become terrorists are not desperately poor and are not generally uneducated. With half of the world's population living on $2.00 per day or less and with more than one billion people with a primary school education or less, there would be many more terrorists if poverty and poor education were sufficient causes. One of the most striking points that Krueger makes in his analysis is that for something that is so important, there is very little hard data collected on terrorism. Using data from the Pew Global Attitude Surveys and additional surveys from the West Bank and Gaza Strip, he shows that support for suicide bombers tends to come from more highly educated residents and does not seem to be significantly related to income. Using data collected with a former graduate student, Claude Berrebi, he compared the information about 48 suicide bombers against the population. Only 13% of suicide bombers came from families below the poverty line versus 33% of the Palestinian population. Even more dramatic, almost 60% of suicide bombers had some college education versus only 15% of the population. This data certainly goes against the common wisdom that suicide bombers are desperately poor and uneducated and give up their lives because they have nothing to lose.

Similar analysis was performed on a dataset Krueger created from the published biographies of 129 deceased martyrs of Hezbollah. Though he points out many limitations with the data, the basic analysis holds with the deceased Hezbollah members having a lower poverty rate and more education than the Lebanese population. Krueger estimated logistic equations on participation in Hezbollah controlling for several factors simultaneously and found that Hezbollah members were more highly educated, wealthier and younger than the population.

While one might surmise that lower income people have a lower opportunity cost of becoming terrorists, it seems that they may value their lives more than their ideological goals. Public opinion data support the idea that better educated people are more drawn to extreme positions. Krueger compares this to the data that more highly educated and higher income people have a greater opportunity cost to vote, yet are still the ones most likely to come to the polls to express their opinions.

In another important point, Krueger notes that terrorist organizations are small and vulnerable, so they want to recruit the best possible candidates. They will tend to select the most highly skilled and motivated individuals from the possible supply of suicide bombers. This suggests that the demand side may have a large effect on who becomes a terrorist.

In his second lecture, Krueger asks, "Where does terror emerge?" For this analysis, he considers macro, country level data. From the U.S. State Department report, Patterns of Global Terrorism, he defines terrorism as "premeditated politically motivated violence, perpetrated against non-combatant targets by sub-national groups or clandestine agents, usually intended to influence an audience." International terrorism involves citizens of more than one country. He particularly notes the poor quality of the U.S. Government's most authoritative data source, the State Department's Patterns report, with a telling anecdote and an amusing clip from John Stewart's, The Daily Show. (1)

Using the corrected State Department data, Krueger created a data set of 956 events from 1997-2003 with information about home country of perpetrators and target country. One striking finding is that 88 percent of international terrorist incidents were carried out by natives from where the attack occurred. Incidents like 9/11 are relatively rare in the data. Krueger then estimates a model for pairs of countries to find what macroeconomic variables can explain the number of terrorist incidents carried out by people from one country against the people or property of another country. The results highlight that origin countries tend to have limited civil liberties. Lack of basic rights to assemble and to protest peacefully led to more terrorists. For the target countries, richer and more liberal countries are most often selected. While neither literacy rates nor schooling levels could explain the origins of terror, the results also showed no significant difference across major religions. Using new data about the foreign insurgents in Iraq, Krueger found similar results.

In his third lecture, Krueger asks, "What does terrorism accomplish?" In his analysis, it is not clear if the effects are large or small. Under the argument for a small effect, Krueger notes that the attacks cause isolated physical damage and egregious but limited loss of life. Even the loss of life on 9/11 was not large relative to the US economy. The economy is also very flexible and allows for substantial substitution. Although the NYC hotels faced severe losses from tourism post 9/11, they were able to house several tenants of the World Trade Center until they could find new permanent homes. Similarly, data from most natural disasters indicate they have only transient effects.

The large effect school is based on three ideas. First, though companies can adapt, there are whole industries that may be significantly affected. Certainly, the travel and convention businesses were heavily affected by 9/11. On the other hand, the financial industry was back in business very quickly. The second reason for a large effect is that people tend to overreact to a terrorist attack. Even if people recognize the probability of being affected is small, they may reduce consumption in response to their exaggerated fears. Another overreaction may be from the government which may crack down on immigration, civil liberties and even invade a country based on false or mistaken data. These responses can have very large costs. The third reason is based on the idea that uncertainty can increase after an attack and increased uncertainty can have a damping effect on future investments and hence on economic growth. The most compelling data for this third hypothesis seems to come from studies on the Basque region of Spain by Alberto Abadie and Javier Gardeazabal (2005) who estimate a ten percent GDP shortfall versus synthetic estimates based on similar regions that did not experience terrorism. These results have not been reproduced in other countries and may be because the ETA terrorism was unusually long lasting in the region.

The media seem to be an important part of the strategy of terrorist organizations. Looking at data on when terrorist incidents occur highlights the preponderance of activity early in the morning, when it can most easily be picked up and become part of the daily news cycle. The media also seem to compete on how sensationally they can report the news at some cost to both accuracy and perspective. Krueger points out that one is 2000 times more likely to die from their own suicide than from a suicide bombing attack.

In his conclusion, Krueger points out that we have been fighting "a data-free war on terrorism" and that seems inefficient. Though he attempts to develop some data sets to explain these premeditated acts of political violence, this is only a scratching of the surface. While Krueger does a good job of refuting the "popular wisdom", this book really establishes that more study is needed to identify the causes of terrorism. Improved data collection and further analysis will be crucial to effectively fight international terrorism.

NOTES

The most authoritative data available on terrorism were from a report, Patterns of Global Terrorism, prepared by the U.S. State Department per U.S. Code Title 22, Section 2656(f). The report for 2003 released in April 2004 showed some charts that indicated the number of terrorist incidents had declined from 426 in 2000 to 190 in 2003, the lowest level for any year since 1982. Deputy Secretary of State, Richard Armitrage cited this data as proof that the U.S. was winning the war on terrorism.

Unfortunately, the appendix showed that the level of "significant attacks" was rising and was at its highest level since 1982. There was another anomaly because the last event in the appendix was from November 11, 2003 and there were deadly attacks in Turkey on November 15th on two Jewish synagogues, the British consulate and a British bank. Another bombing occurred in Saudi Arabia a few days later. Krueger tried to get an explanation from the State Department, but was unable until he published an Op Ed piece in the Washington Post in May 2004 which accused the State Department of manipulating the data. On June 10th, the State Department spokesman held a press conference to report the discovery of errors in the report. The number of fatalities had been underestimated by 50% and the corrections would fill eight pages. In a subsequent interview by Tim Russert with Secretary of State Colin Powell, Powell admits that it is "Very embarrassing. I am not a happy camper over this. We were wrong." John Stewart presented an amusing critique of the event on The Daily Show on June 14th.

Michael Ehrlich

New Jersey Institute of Technology

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Author:	Ehrlich, Michael
Publication:	American Economist
Article Type:	Book review
Geographic Code:	1USA
Date:	Sep 22, 2009
Words:	1720
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