Re: Iraq War Cost at $1-2 Trillion, not $100-200 Billion?


"kuff (Isaac Adams)" <kuff00@xxxxxxxxx> wrote in message
news:1136789960.404056.201380@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
>
> Count 1 wrote:
> > "kuff (Isaac Adams)" <kuff00@xxxxxxxxx> wrote in message
> > news:1136653125.470051.252830@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> > >
> > > Count 1 wrote:
> > > > "Phaedrine" <Phaedrine.Stonebridge@xxxxxxxxxxxxxxx> wrote in message
> > > >
> >
news:Phaedrine.Stonebridge-438E14.17063706012006@xxxxxxxxxxxxxxxxxxxxxxxxxxx
> > > > >
> > > > > <http://www.truthout.org/docs_2006/010606L.shtml>
> > > > >
> > > > > The Cost of the War [excerpt]
> > > > > By Pascal Riche, TPM Cafe
> > > > > Thursday 05 January 2006
> > > > >
> > > > > .....New Study Suggests Economic Cost of Iraq War Much Larger than
> > > > > Previously Recognized
> > > > >
> > > > > A new study by two leading academic experts suggests that the
> > costs
> > > > > of the Iraq war will be substantially higher than previously
reckoned.
> > > > > In a paper presented to this week's Allied Social Sciences
Association
> > > > > annual meeting in Boston MA., Harvard budget expert Linda Bilmes
and
> > > > > Columbia University Professor and Nobel Laureate Joseph E.
Stiglitz
> > > > > calculate that the war is likely to cost the United States a
minimum
> > of
> > > > > nearly one trillion dollars and potentially over $2 trillion.
> > > > >
> > > > > The study expands on traditional budgetary estimates by
including
> > > > > costs such as lifetime disability and health care for the
over16,000
> > > > > injured, one fifth of whom have serious brain or spinal injuries.
It
> > > > > then goes on to analyze the costs to the economy, including the
> > economic
> > > > > value of lives lost and the impact of factors such as higher oil
> > prices
> > > > > that can be partly attributed to the conflict in Iraq. The paper
also
> > > > > calculates the impact on the economy if a proportion of the money
> > spent
> > > > > on the Iraq war were spent in other ways, including on investments
in
> > > > > the United States
> > > > >
> > > > > "Shortly before the war, when Administration economist Larry
> > Lindsey
> > > > > suggested that the costs might range between $100 and $200
billion,
> > > > > Administration spokesmen quickly distanced themselves from those
> > > > > numbers," points out Professor Stiglitz. "But in retrospect, it
> > appears
> > > > > that Lindsey's numbers represented a gross underestimate of the
actual
> > > > > costs."
> > > >
> > > > Studies of this nature are about as useful as consulting
> > > > voodoo...uhhhh...just what the hell do you call someone who performs
> > voodoo?
> > >
> > > Let's see. "Voodoo economics" was Regean economics so, in this
> > > context, I suppose you'd call them Regeanites.
> >
> > There you go quoting George Bush senior again.
>
> So as an answer to your question is it right or wrong?

Its wrong. I doubt very much voodoo practitioners are called 'Reaganites'.


>
> >
> >
> > > > They rely on assumptions so broad, such as the effect of higher oil
> > prices
> > > > and opportunity costs of lost 'investments' in the economy that they
> > can't
> > > > be taken with much seriousness.
> > >
> > > Those are valid economic concerns. Ask an airline or railroad
> > > company.
> >
> > I'm not saying they aren't valid concerns, I'm saying its inherently
tricky
> > to develop a direct economic dollar based cost of something like a war
on
> > them.
>
> Well a Noble Prize winner in Economics is presumably capable of doing
> the tricky stuff, eh?

Its not a black and white question. The numbers Stiglitz developed are
predicated on models and assumptions. During the peer review process a
consensus will appear concerning the quality of the data and mathematics he
employed.

We can say he's capable of the tricky stuff if in the future if his numbers
can be shown to be accurate.


> > > > Quite clearly Professor Stiglitz is speaking
> > > > out of turn when he say's 'Lindsey's numbers represented a gross
> > > > underestimate(...)'. Stiglitz used a much broader data set than
Lindsey
> > did,
> > > > inevitably resulting in much different numbers.
> > >
> > > Broader data should result in more precise numbers.
> >
> > That's a ridiculous assumption, and doesn't speak to the point.
>
> "Unless by narrower data you mean incomplete and therefore inaccurate
> data."

??

> > The fact
> > that Stiglitz used a different data set means he can't say Lindsey's
numbers
> > are a gross underestimate.
>
> Unless he used a broader set of data. Lindsey may have just used
> unpaid parking tickets in DC and military reup bonuses for all we know.
>
> Stiglitz is using a broader set of costs.

Yes Kuff, we know that. That was established in Phae's original post. I am
raising the point that broader data sets does not necessarily result in more
accurate outputs.


> > Unless he's referring solely to his analysis of
> > the data Lindsey used, and not the broader data set he appears to be
using.
> >
> >
> > Unless by
> > > narrower data you mean incomplete and therefore inaccurate data.
> >
> > The amount of data isn't really the point. Its the quality of data used.
I'm
> > suggesting if the data used includes figures for items like lost
opportunity
> > costs for investments then its using numbers based on very broad
> > assumptions.
>
> I agree it is nothing but the quality, the whole quality and nothing
> but the quality of the data being used. Opportunity cost is a very
> important quality the naive often overlook.

If you agree its all about the quality of the data, then you should be aware
that 'opportunity cost' are calculated using a variety of assumptions made
by the authors, especially in a macroeconomic study of this nature.
Therefore we shouldn't merely assume his study is going to be more accurate
just because we can say 'but he included opportunity costs'. He did include
opportunity costs, but he included *his* opportunity costs. It'll be
interesting to see what a peer review of his work produces.



> > > > While its important to look at broader economic factors than just
direct
> > > > cost, economics gets in trouble when it tries to look at too broad a
> > > > picture. The mathematics become skewed by the biases of the
economists.
> > >
> > > The values that are calculated by the mathematics can be skewed by
> > > biases but not the mathematics themselves. If you have 'broader',
> > > more accurate numbers to be processed by the mathematics then bring
> > > them forth.
> >
> > Actually the mathematics themselves can be skewed by the biases built
into
> > the process, it all has to do with the choice of mathematics employed,
but
> > that's another topic.
>
> One a Noble Prize winner in Economics should be able to address
> somewhat better than a political appointee whose previous experience
> might have been determining feed costs for the Arabian Horse Racing
> association. :-)

Maybe. However I'm not sure his awards and resume have anything to do with
the point about how mathematics are not immune to human bias.


> > And you should be aware that 'broader' doesn't make
> > data 'more accurate'.
>
> No it doesn't - necessarily. And you should be aware that narrower
> often makes data less comprehensive. Especially when a political
> appointee is asked what the cost will be for something his masters want
> to do.

You will note I'm not defending Lindsey's work, nor am I suggesting Stiglitz
work has been affected by outside powers manipulating his research, not an
unthinkable scenario considering he has employers active in the political
field as well. I didn't think I'd have to mention the fact that Lindsey
works for the government, making his biases and motives (inevitably
affecting his research) clear for all to see.


> > Outputs are based on the quality of the inputs.
>
> Indeed. Unless you have some listing of the inputs used by both the
> parties ('broader' dataI tend to expect Stiglitz to do a better job.
>
> > Inputs like 'economic value of lives lost' is clearly compromised data.
This
> > will naturally result in poorer output.
>
> Not really. Lives lost does have an economic impact. Not including
> them in a cost estimate leads to a poorer output.

You're repeating yourself. Do you not agree that attaching a dollar value to
the 'economic value of lives lost' is an inherently tricky proposition, one
that requires a whole series of assumptions to be made? Keep in mind that
such a calculation is based on a hypothetical....the hypothetical life of
the person. Its much harder to have confidence in your coefficients using
such numbers. This is a basic fact of economic research. Its very possible
Stiglitz used numbers the majority of economists agree are based on very
reasonable assumptions. But we (as the consumers) shouldn't take that as a
given.


> > It shouldn't be ignored, but it should be consumed with caution.
>
> Indeed. Noble Prize winner or political appointee? I know where my
> biases are pending 'broader' data to the contrary.

Then I hope the future confirms for you that you made the right decision.
Personally I'll hold off on judgement until then. I don't do voodoo.




.

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