The Economics of Roadside Bombs

http://www.wm.edu/economics/wp/cwm_wp68.pdf

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The U.S. military has been criticized for its failure to stop the Iraqi insurgency’s use of improvised explosive devices (IEDs), which have caused most of the Coalition casualties. We use an instrumental variables approach to estimate the insurgent responses to U.S. military countermeasures. We find that the number of IED attacks (including unobserved attacks) goes up
when attacks are made more costly to conduct, suggesting that IED attacks are inferior and may even be a Giffen good. A major benefit of IED countermeasures therefore comes in reducing non-IED attacks. Evaluations of the U.S. military’s $13 billion counter-IED effort have thus significantly understated its success.

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This is probably the strangest thing I’ve seen to date. Something like the old lady in tennis shoes processing my TDY voucher and asking me why the rental car company won’t cover the shattered windshield from a burst of 7mm rounds. :wry:

I certainly never expected the Economics Department of William and Mary to cover IED and IEDD.

I began to enjoy the paper until economics and IED jamming devices went overboard. Frankly, the more relevant issue that escapes this lengthy paper is that not all military forces are taught IED countermeasures during basic training.
EOD and Law Enforcement levels were at an otherwise adequate level before IEDs became so prevalent. Fact is we adapted and overcame the issue in record time. The costs of doing this are in no way relevant when our soldier’s lives are at stake. We can’t do that cookie cutter approach with a calculator…or can we?

Their conclusion is mind-boggling and I conclude the author(s) should be forced to join the Army for a period not less than 2 years in Iraq or Afghanistan with principle duties as a MSR-1 jeep driver, MOS non-specific :D

I too will argue that their conclusion is a little off.

Countermeasures do work, and did reduce successful attacks. The enemy just switched his triggers.

It was my impression that discussing our countermeasures was a no-no, but a Newsweek story kind of ruined that (2006). I guess there is still a lot more info out in the open than I thought.

First off, thanks for all the comments! The more opinions I hear, the better I can make my paper.

Both my advisor and I got a kick out of this:

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Originally Posted by Stan

I certainly never expected the Economics Department of William and Mary to cover IED and IEDD.

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I admit, people usually look at me funny when I tell them I study the economics of national security. For the past couple of years, I have worked part-time for a DoD think tank in support of JIEDDO, collecting and organizing data on trends in the IED fight. However, this paper is entirely my own work, done on my own time, with no access to any data except what are available on the Internet. Anyone out there can replicate my study, down to counting the pixels on this JIEDDO PowerPoint presentation. (The data are also available from Rick Atkinson's Washington Post article on IEDD.) I wrote the paper because I think we have been measuring the success of countermeasures incorrectly, and that it is both interesting and important to do it right.

Stan, to respond to your comment: I agree that soldiers need to be taught more than the 9-line UXO in basic. However, my paper is not meant to be a survey of IEDD, it's looking at one relatively narrow issue: that jammers have done more than we previously thought to harm the insurgents. If we only look at the effect of jammers on IED attacks (as we have done in the past), we miss an important effect: that our using jammers reduces the resources the insurgents have to do small arms fire, rocket, mortar, and sniper attacks. My estimate is that we reduced the insurgents' capabilities such that they did at least 1,997 fewer non-IED attacks than they otherwise would have during July 2004-April 2007.

That takes me your point, Pat: in the paper, I estimate that at least 1,504 IED attacks that would have been effective were made ineffective by jammers during the time period, which is certainly an important effect. However, I don't think anyone has considered the effect above, on non-IED attacks -- that's where the value of my paper is. I am sure the insurgents switched triggers because of jammer use -- in fact, I use that switch to identify the causal link between jammers and non-IED attacks (since neither side can predict accurately what the other will do, the deployment of more jammers causes a random shock to insurgent behavior that acts like an experiment would -- obviously it is impossible to do a controlled experiment in this setting). I have no data on jammer use itself.

It's important to note that my estimates are lower bounds on the actual numbers. Jammers have probably had much more of an impact than what I measure. For one thing, I cannot measure how many additional attacks went unobserved as a result of jammer use (which is the jammers' primary effect).

I appreciate your taking the time to wade through my paper and make comments. I'd be interested in hearing any more thoughts that you have.

Matt Hanson

I've talked to the President (former?) of William and Mary a few times. He used to either visit/ or live next to my in-laws on Smith Mountain Lake in VA. I'm kind of surprised at the idea of them doing DOD work too. Cool project though.

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Originally Posted by mhanson

First off, thanks for all the comments! The more opinions I hear, the better I can make my paper.

I appreciate your taking the time to wade through my paper and make comments. I'd be interested in hearing any more thoughts that you have.

Matt Hanson

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Hey Matt !
First and foremost welcome to the SWC. I look forward to more posts from you. If you do intend to stick around, please introduce yourself to the other members here.

Although I got the general thrust of your paper (Jamming Equipment), I felt it went too “economic” for my overall EOD interests. Granted, you’re studying economics and I understood that before reading your paper. You put quite a bit of information together, and perhaps had you used some of your think tank’s unclassified info and stats, you’d end up with a real first class product. What did your colleagues think of the paper ?

I’m not so sure we ‘missed’ or ‘didn’t look at’ the benefits and effects of jamming equipment. My personal view is perhaps our methods are simply not as publicized (for obvious reasons) as our other operational tactics and equipment utilization. Our EOD teams have been using various jamming equipment since early 1997. What we don’t have a good handle on is just how effective those devices are (we employ them as a matter of routine, and in some cases unintentionally employ them). I fully agree with your assessment, but overall see this subject in a different vein.

While I also agree with your conclusion (the use of jamming equipment surprised and stymied the insurgents activities), I’m not sure how you came up with 1,504 less attacks. There’s certainly anecdotal evidence to cover several instances where an IED was found and rendered safe (later forensics determined the IED was not merely defective, but still fully functional).

Regards, Stan

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Originally Posted by mhanson

First off, thanks for all the comments! The more opinions I hear, the better I can make my paper.

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Matt--its a very interesting paper (and data!). Reading it, I had several thoughts.

1) You treat all direct, non-IED attacks as the same--and argue that IED attacks are an inferior good, since insurgents would, if they had the resources, prefer to engage in direct fire attacks if they could.

What if direct attacks, however, are two separate goods: sniper-type attacks which are intended to inflict harm but not capture territory, and attacks intended to overrun/control territory? The former, it seems to me, are substitutable with IEDs by your logic (from the point of view of insurgent aims, if not technical capabilities).

You don't have any option, given the way the data is coded, but to treat them this way--but a footnote raising the question might be appropriate.

On a related note, I suspect that the "direct attack" numbers conflate cases where the insurgents were the initiator and those where they responded with direct fire to an immediate threat from coalition or Iraqi military activity. The latter isn't really a rational resource allocation, however. (Put differently, the data would code a successfully emplaced IED as an IED attack, but a firefight between a US patrol and the emplacers caught-in-the-act a short while earlier as a direct fire attack.)


2) You've modeled the insurgents as the consumers, responding changes in the cost of goods and income (resource availability). Would you be led to similar or different conclusions if they were treated as competitive firms responding to high and price inelastic consumer demand?


3) You assume that all IED have similar costs. It might be argued that the cost of PP and and CW triggered IEDs was "lower" than RC, PI and CP triggers (in terms of material cost and technical expertise). Conversely, it could be argued that the cost of LPRC and CW triggered IEDs was "higher" (given the greater risk involved in deploying the trigger team closer to IED site).


4) PI and PP systems have less tactical discrimination than do command-detonated systems, and hence their utility may change depending on the nature of the fighting (maintaining a defensive perimeter in a Fallujah-type battle, compared to harassment attacks on commonly used public thoroughfares). Can "blips" be detected in their use that corresponded to the nature of combat operations at a given time? Similarly, it is my completely uninformed understanding that PI triggers have been particularly associated with EPF use, especially by Shi'ite militias (I could well be wrong), in which case fluctuations in their use might relate to broader political issues.


5) How sure can you be that insurgents measure "effectiveness" in the same way your data does? One can imagine that an IED detonation which creates a sense of insurgent presence and threat, but which fails to kill or seriously wound, might be considered a "successful" outcome.


6) You might explicitly identify other competing explanations as to why IED attacks have climbed and NIED have fluctuated--and suggest why your inferior/Giffen good argument gives a better explanation of the data. (One way of testing this would be to break the data down by region: your findings should be fairly consistent across locations, while arguments focused on say, insurgent politics or operational strategy would predict significant regional variation). At first, a stronger predictor or NIED attacks is the wave of sectarian violence that followed the February 2006 al-Askari mosque bombing.

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Originally Posted by Rex Brynen

1) You treat all direct, non-IED attacks as the same--and argue that IED attacks are an inferior good, since insurgents would, if they had the resources, prefer to engage in direct fire attacks if they could.

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Excellent point. I came to the opposite conclusion based on the data: that insurgents believe IEDs are by far their most effective method of attack. They only resort to other methods - less effective methods - when they've placed IEDs everywhere they can. As soon as we render IEDs ineffective, they devote all their resource to avoiding our counter measures and making IEDs effective again.

at all if the can avoid it; their loss ratio is way too high. They are putting a lot of effort into keeping the IED attack route alive and well.

Also might consider the value of IEDs planted to disrupt versus those designed just to create noise / confusion versus those designed to specifically attack high value targets with significant PR value. For example, an AAVP with 28 troops versus a HMMWV with 2; an M1 Tank versus a fuel tanker -- even though the tanker is more tactically important than the tank, the tank has a far higher PR value to them.

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Originally Posted by Rank amateur

Excellent point. I came to the opposite conclusion based on the data: that insurgents believe IEDs are by far their most effective method of attack. They only resort to other methods - less effective methods - when they've placed IEDs everywhere they can.

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Matt's presumption is this:

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The inferiority of IED attacks suggests that insurgents would prefer to be engaging in non-IED attacks, probably because the long-term gains from IED attacks are small. Non-IED attacks hold out the promise of control of territory, and with it, political legitimacy.

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It is a valid point. However the logic applies more to domestic actors in a civil war than external actors. In the case of the latter, the insurgents may be able to manipulate the cost/benefit calculations of the external actor to the point that they decide to leave (France in Algeria and Vietnam, the British in Aden, and perhaps the US in Iraq).

Domestic combatants rarely have such an option to "exit."

on that:

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"...and perhaps the US in Iraq)."

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:D

Grr, I hate the time limit on editing posts now.

EPF should be EFP, of course.


And no, Ken, I'm not betting any farms ;)

Selil, was the guy you talked toTimothy Sullivan or Gene Nichol?

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Originally Posted by Stan

You put quite a bit of information together, and perhaps had you used some of your think tank’s unclassified info and stats, you’d end up with a real first class product. What did your colleagues think of the paper ?

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JIEDDO has asked me to do a follow-on study to confirm the results. They told me that nobody had yet studied the effect IED countermeasures have on non-IED attacks, and were quite interested (for fairly obvious reasons) in the possibility that this was an area in which nobody (including them) had previously recognized their contributions.

They are also inviting me to present my paper at the Military Operations Research Society meeting at the Coast Guard Academy in June -- anyone here going to be there?

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Originally Posted by Stan

I’m not so sure we ‘missed’ or ‘didn’t look at’ the benefits and effects of jamming equipment.

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There certainly have been studies of the effectiveness of jammers before, but I don't think anyone has yet done a quantitative assessment of their impact on things they weren't intended to affect -- non-IED attacks.

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Originally Posted by Stan

While I also agree with your conclusion (the use of jamming equipment surprised and stymied the insurgents activities), I’m not sure how you came up with 1,504 less attacks.

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The 1,504 IED attacks figure is a statistical estimate from the correlation between trigger use and IED effectiveness. First, I control for changes in trigger use the insurgents decide to make -- that is, since the insurgents know at least approximately how effective they were last month, how does that affect their balance of triggers used this month? Once that decision is modeled, other changes in trigger use are, I argue, a function of jammers (since more jammers mean less radio control trigger use) and some element of random chance. Those changes in trigger use are correlated with lower IED effectiveness, and from that correlation you can then derive an estimate of how many IED attacks were made ineffective.

Obviously, it's ridiculous to defend the 1,504 figure as opposed to, say, 1,503 or 1,505. It is, in fact, highly likely that the true figure is not exactly 1,504. However, 1,504 is my best estimate, and the probability of being right goes down drastically the farther away you get from 1,504.

If someone's life, or hundreds of millions of dollars, rested on the question of whether the number of attacks made ineffective was 1,504 or 1,503, my paper would be of virtually no help in making such a decision. However, suppose the decision was about how much money to spend on jammers versus equipment that could reduce the effectiveness of non-IED attacks (say, more counterbattery radars). In that case, I think my paper would have something very interesting to say -- that we now know, with high probability, that you get a lot more bang for your buck than we have previously thought if you spend money on jammers. I don't think my paper has any direct applicability to anyone operating below the brigade level, but I think it has some interesting applications for assessing the relative merits of various systems that might be deployed.

EDIT: Can't seem to get the first quote to work. Oh well.

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Originally Posted by Rex Brynen

You treat all direct, non-IED attacks as the same--and argue that IED attacks are an inferior good, since insurgents would, if they had the resources, prefer to engage in direct fire attacks if they could.

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I probably didn't make this clear enough in the paper, but my only strong reason for believing that IED attacks are an inferior good is because the statistical results work out that way. I do talk about the reasons why that might be the case, but that is just speculation on my part.

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What if direct attacks, however, are two separate goods: sniper-type attacks which are intended to inflict harm but not capture territory, and attacks intended to overrun/control territory? The former, it seems to me, are substitutable with IEDs by your logic (from the point of view of insurgent aims, if not technical capabilities). You don't have any option, given the way the data is coded, but to treat them this way--but a footnote raising the question might be appropriate.

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You might well be right about that. In fact, I think a more detailed, classified study could really nail down a lot of issues like that and actually begin to test competing hypotheses -- presumably, if sniper attacks were not also inferior, that would disprove my speculative theory.

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On a related note, I suspect that the "direct attack" numbers conflate cases where the insurgents were the initiator and those where they responded with direct fire to an immediate threat from coalition or Iraqi military activity.

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Probably true, but those cases would also be interesting because they would be complex attacks. Complex attacks imply some complementarity between IED and non-IED attacks -- which would suggest that if they were treated seperately, the substitution effect I find would actually be stronger.

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2) You've modeled the insurgents as the consumers, responding changes in the cost of goods and income (resource availability). Would you be led to similar or different conclusions if they were treated as competitive firms responding to high and price inelastic consumer demand?

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The theoretical framework I use is utility (damage) maximization by a consumer -- that is, maximization of a nonlinear function subject to a linear resource constraint. However, every constrained maximization (primal) problem has a corresponding constrained minimization (dual) problem. The dual case corresponds to treating the insurgents as cost-minimizing firms. The conclusions are exactly the same (though, as a referee for the Quarterly Journal of Economics pointed out, this may not be an example of Giffen behavior -- in the latest version of the paper, I have taken out the Giffen hypothesis).

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3) You assume that all IED have similar costs. It might be argued that the cost of PP and and CW triggered IEDs was "lower" than RC, PI and CP triggers (in terms of material cost and technical expertise). Conversely, it could be argued that the cost of LPRC and CW triggered IEDs was "higher" (given the greater risk involved in deploying the trigger team closer to IED site).

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I assume that radio control triggers have higher profit than other types of triggers. Otherwise, I don't see a good explanation for why the insurgents shifted over to other triggers slowly -- with all the talk about how adaptable the insurgency is, it seems implausible to me that they would figure out how much more better non-R/C triggers were and then take 2-3 years to actually switching over to other types of triggers. I think that they don't use R/C much anymore precisely because it's not effective -- but that they would have preferred to keep using it if we had let them.

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4) PI and PP systems have less tactical discrimination than do command-detonated systems, and hence their utility may change depending on the nature of the fighting (maintaining a defensive perimeter in a Fallujah-type battle, compared to harassment attacks on commonly used public thoroughfares). Can "blips" be detected in their use that corresponded to the nature of combat operations at a given time? Similarly, it is my completely uninformed understanding that PI triggers have been particularly associated with EFP use, especially by Shi'ite militias (I could well be wrong), in which case fluctuations in their use might relate to broader political issues.

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With quantitative data about combat operations, perhaps. However, I don't know where this data might be found (even on the classified side). In my follow-on study, I intend to use panel data (data over time and location, as opposed to just the over time data I have now) so that I can control for regional and time effects.

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5) How sure can you be that insurgents measure "effectiveness" in the same way your data does? One can imagine that an IED detonation which creates a sense of insurgent presence and threat, but which fails to kill or seriously wound, might be considered a "successful" outcome.

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Certainly, but the only assumption I need for my model is that they prefer an IED that produces causalties to one that does not produce casualties. They can still derive some utility from an ineffective IED attack, just not as much.

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6) You might explicitly identify other competing explanations as to why IED attacks have climbed and NIED have fluctuated--and suggest why your inferior/Giffen good argument gives a better explanation of the data. (One way of testing this would be to break the data down by region: your findings should be fairly consistent across locations, while arguments focused on say, insurgent politics or operational strategy would predict significant regional variation). At first, a stronger predictor or NIED attacks is the wave of sectarian violence that followed the February 2006 al-Askari mosque bombing.

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Indeed. As I mentioned above, panel data is the way to test those hypotheses.

I realize not all the above answers are totally satisfying, but hopefully they're a start. Here's a question for you -- why might IED attacks appear inferior, if it's not a question of control of territory? I certainly believe there are reasonable alternative explanations, but I can't think of any.

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Originally Posted by Rank amateur

Excellent point. I came to the opposite conclusion based on the data: that insurgents believe IEDs are by far their most effective method of attack. They only resort to other methods - less effective methods - when they've placed IEDs everywhere they can. As soon as we render IEDs ineffective, they devote all their resource to avoiding our counter measures and making IEDs effective again.

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I find it hard to believe that the insurgents have really placed IEDs everywhere they can. First of all, the number of IEDs observed has varied drastically over time -- are they finding new places to put them? Second, why not just place more IEDs near each other and give EOD more work to do?

I think it's more likely that at some point, putting more IEDs in the ground is just not all that worthwhile (which I think is very close to what you are saying). Are you really getting a whole bunch more bang for your buck by daisy-chaining a seventh IED into a string of six? It'd probably be better to use those resources for some other activity.

It's exactly that kind of behavior that would lead to a causal impact of IED countermeasures on non-IED attacks -- that you can get those effects when the benefits of placing additional IEDs are low relative to the costs. I think your interpretation fits in quite nicely with my theory -- the question is explaining why I get the statistical result that IEDs are inferior (the insurgents do proportionally more of them when their total resources go down). Why wouldn't a reduction in insurgent resources cause them to scale back IED and non-IED attacks equally?

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Originally Posted by mhanson

JIEDDO has asked me to do a follow-on study to confirm the results. They told me that nobody had yet studied the effect IED countermeasures have on non-IED attacks, and were quite interested (for fairly obvious reasons) in the possibility that this was an area in which nobody (including them) had previously recognized their contributions.

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Sounds great ! Good luck with your presentation at the USCG Academy !

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Originally Posted by mhanson

If someone's life, or hundreds of millions of dollars, rested on the question of whether the number of attacks made ineffective was 1,504 or 1,503, my paper would be of virtually no help in making such a decision. However, suppose the decision was about how much money to spend on jammers versus equipment that could reduce the effectiveness of non-IED attacks (say, more counterbattery radars). In that case, I think my paper would have something very interesting to say -- that we now know, with high probability, that you get a lot more bang for your buck than we have previously thought if you spend money on jammers. I don't think my paper has any direct applicability to anyone operating below the brigade level, but I think it has some interesting applications for assessing the relative merits of various systems that might be deployed.

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I'm no economics expert, but have managed DOD budgets in excess of seven million and well below the brigade level. In short, your paper needed larger numbers to support an initially huge procurement. If we break those figures down to a single soldier's life versus the purchase of a single jamming device, the numbers quickly support the purchase:
Payment to soldier's beneficiary = $200,000 - $250,000
one each MILSPEC Signal Jamming Device = $60,000 - $85,000)

Now all we have to do is get a congressman's son into EOD and the rest of the procurement(s) will go like Sierra through a goose :p

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Originally Posted by mhanson

I find it hard to believe that the insurgents have really placed IEDs everywhere they can. First of all, the number of IEDs observed has varied drastically over time -- are they finding new places to put them? Second, why not just place more IEDs near each other and give EOD more work to do?

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Matt, I believe that stating 'placed everywhere they can' translates to 'their' capabilities, not physical locations available. It can, and probably does also mean we have not discovered all of the IED placements (some of our common fallacies were our daily routines. Changing those also reduced IED discoveries/incidences that can not be easily recorded as the IEDs could very well still be out there). 'Where they can' also translates to not being observed during placements. Far too many variables.

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Originally Posted by mhanson

I think it's more likely that at some point, putting more IEDs in the ground is just not all that worthwhile (which I think is very close to what you are saying). Are you really getting a whole bunch more bang for your buck by daisy-chaining a seventh IED into a string of six? It'd probably be better to use those resources for some other activity.

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If we look at most of the recorded criminal-related IED incidences around the world, more often than not, there are at least two IEDs; a guaranteed or clear escape route if you will. Second or consecutive IEDs are indeed 'more bang for your buck', and could be specifically intended for EOD personnel (after all, we are decreasing IED effectiveness.).

Likely Nichol, I'll ask my father-in-law next time I see him. I'm terribly horrible with names. It was likely Nichol as that was the time period.

I've met dozens of super-bowl veteran and haven't a clue as to who, and the greatest impression has been their rather enormous rings. Same with politicians I've met. Now Vint Cerf I remember all 30 seconds of that conversation....