The True Cost of War
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World Bank, Washington, DC
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Measuring the economic impact of a
war is a daunting task. Common indicators like casualties,
infrastructure damages, and gross domestic product effects
provide useful benchmarks, but they fail to capture the
complex welfare effects of wars. This paper proposes a new
method to estimate the welfare impact of conflicts and
remedy common data constraints in conflict-affected
environments. The method first estimates how agents regard
spatial welfare differentials by voting with their feet,
using pre-conflict data. Then, it infers a lower-bound
estimate for the conflict-driven welfare shock from
partially observed post-conflict migration patterns. A case
study of the conflict in Eastern Ukraine between 2014 and
2019 shows a large lower-bound welfare loss for Donetsk
residents equivalent to between 7.28 and 24.79 percent of
life-time income depending on agents’ time preferences.
Palabras clave
CONFLICT, REVEALED-PREFERENCES, DATA CONSTRAINTS, DATA CONSTRAINTS INTERNALLY DISPLACED PEOPLE, BURDEN OF WAR, PSYCHO-SOCIAL WAR TRAUMA, ECONOMIC IMPACT ASSESSMENTS OF WAR, ARMED CONFLICT BURDEN, CONFLICT-RELATED INCOME SHOCK, FORCED DISPLACEMENT