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Economics and COIN
A few months ago, my buddy George Feese, a USMA graduate and two-time Iraq veteran with whom I attended both the infantry officer basic course and Ranger School, introduced me over email to Tim Harford, the consistently thought-provoking "Undercover Economist" who writes for the Financial Times. Tim was exploring areas in which contemporary conflict and economics intersect. As I boarded a plane at London Heathrow this past weekend, I read the column that resulted from Tim's investigation. It's really interesting:
Some of the more successful tactics in Iraq and Afghanistan have indeed been built on the simple economists’ prescription: if you want to change behaviour, change incentives. For example, killing insurgents without holding territory did not encourage co-operation from bystanders, as anyone who had collaborated would be killed when the insurgents returned. When coalition forces switched to the tactic of holding territory and preventing the return of insurgents, people became happier to share information.
The more psychologically detailed insights of behavioural economics may also be promising. [Andrew] Mackay and [Steve] Tatham cite Afghanistan’s National Solidarity Programme as an example of the “choice architecture” described by policy guru Cass Sunstein and the behavioural economist Richard Thaler. The NSP handed out grants to villages, provided the village leaders were elected by secret ballot, held communal meetings, and posted accounts in a public place: a nudge towards better governance.
Readers of this blog will remember I'm a big fan of the NSP, but specific programs aside, the connection between COIN and "choice architecture" is a really interesting one that provides a useful social science framework for officers conducting operations in parts of Afghanistan. The wider connection between counterinsurgency and the social sciences, of course, is well understood. David Kilcullen argues in a new anthology, for example, that intelligence in counterinsurgency is like conducting ethnography -- but the "ethnography of hell":
...it is carried out in appallingly violent circumstances in which people and societies suffer incredible brutality and unbearable pressure, where informants are under intense threat, information is often impossible (or impossibly risky) to acquire or verify, the object of study is changing rapidly, and intelligence officers themselves work under starkly difficult and dangerous circumstances."
Difficulties aside, most U.S. Army and Marine Corps officers are not trained as social anthropologists or ethnographers. Economics, though, is more accesible. It is, at the most basic level, the science of decision-making. How people make decisions and what incentives drive them to make decisions (or not make decisions) is a question we can all ask and, again, a useful framework for thinking about the conflict environment in Afghanistan. Harford, though, interestingly concludes that we might look to Afghanistan to understand the world of finance and not visa versa:
Whether or not generals can learn from economists, economists can certainly learn from generals. I have been as guilty as anyone of being fascinated by behavioural economics. But the financial system did not fail because of some psychological trait, but because it was riddled with damaging incentives that were hard to spot because the system was complex and changing quickly. So, too, with counter-insurgency: Mackay started by thinking about economic psychology but ended up focusing on complexity, and what it takes to create an organisation capable of adapting to complexity. It has taken me too long to come to the same conclusion myself.
Thoughts from the readership on all of this are, as always, highly welcome.
Interesting stuff all, but
Interesting stuff all, but kind of basic, isn't it? Human beings will do nothing unless incentivised and are particularly unlikely to act in ways which run the risk of harming them. Do we need a whole science and philosophy of counter-insurgency to tell us that you need to give people a positive reason to cooperate with you beyond short-term threats of violence?
Didn't DARPA try to roll
Didn't DARPA try to roll something out once harnessing the predictive powers of free markets to anticipate future events?
Oh yeah this....
http://www.noahshachtman.com/archives/000514.html
Would sure beat looking at a TSP once a month.
Now if you could just tranlate trends from the macro level to any random farmer in his field you'd be a rich man (or woman).
What's the title of the new
What's the title of the new anthology that you quote Kilcullen from?
First thoughts: "Economics,
First thoughts:
"Economics, though, is more accesible."
It is?
"It is, at the most basic level, the science of decision-making."
Psychology isn't?
I'd argue the social sciences are merging - e.g., behavioral economics and finance, the awarding of the Nobel (Memorial) Prize in Economics this year to a political scientist.
ADTS
... "The Golden Bough" is
... "The Golden Bough" is seen in the film Apocalypse Now in the stack of reading material for Colonel Kurtz, along with Jessie Weston's "From Ritual to Romance".
" But the financial system
" But the financial system did not fail because of some psychological trait, but because it was riddled with damaging incentives that were hard to spot because the system was complex and changing quickly."
Some things were in place for a couple of decades:
1) Many people were paid most of their pay in bonuses at the end of the year for work whose true value wouldn't be known for years. By which time they
2) Much of the work required detailed understanding of specific areas, combined with a good judgement of human behavior - in short, if you weren't involved in a specific project, it could be very, very hard to judge the work. And that's for finance people; shareholders were very much in the dark, even if they had some inside sources for information (and, of course, most wouldn't).
3) Wall St attracts and promotes very smart, slick, aggressive, high-energy, risk-tolerant/loving people, and motivates them with the promise of a lot of cash. It's where people like this are concentrated out of ~1 billion potential candidates. This results in a strong and strange culture.
4) Most large Wall St companies were corporations, not partnerships. This means that the upper management's life savings were only partially tied up in the overall success and survival of the corporation (unlike partnerships, where a partner 'cashed out' upon retirement, and failure of the partnership totally ruined the partners).
5) It's hard for regulators to do their jobs, and that's before the Wall St firms buy off the government.
6) Leverage is sweeeeeeeeeeet, it multiplies profits (and losses, but see 1-5 above). It's frequently highly rational for people in Wall St firms to play 'double or nothing'; they have the potential of an incredible upside, which outweighs the downside.
interesting article....
interesting article.... reminds me of a discussion going on at ICSR (Kings College London) about the role of collective action and other psychology/social science applications to understand and then counter radicalization. http://www.icsr.info/blog/Preventing-er-Countering-Violent-Extremism-com...
the only part I wonder about moving forward is how to identify specific incentives. Using a 'choice architecture' to identify societal preferences is one thing, moving to the next level of tangible actions with longevity may be more difficult to determine or measure.
Wheat Kings: Whose work are
Wheat Kings:
Whose work are you referring to when you reference "choice architecture?"
ADTS
ADTS -- If I remember
ADTS -- If I remember correctly, that language comes from Sunstein and Thaler's Nudge.
"But to supplement the work
"But to supplement the work of the State Department, this paper proposes a new organization,
called the USA•World Trust, which would unleash the power of the private sector to further America’s public diplomacy interests.
...
The Trust would provide grants to U.S. and foreign organizations able to advance these goals and serve as a hub of collaboration between government agencies and the private sector."
Does anyone else find this somewhat disturbing? Perhaps I am being old-fashioned and naive about the distinction between public and private in our political and legal system, but ...
It's from the new CNAS report on network diplomacy: http://www.cnas.org/files/documents/publications/QDDR_Lord_Jan2010_code2...
Damaging incentives in the
Damaging incentives in the pre-crash financial system were not hard to spot. They were noted and commented on frequently. This comment was not, however, acted upon, because the incentives' eventual consequences were costs imposed on a large number of people in the indefinite future, while their benefits were enjoyed by a much smaller and more concentrated group of people in the present.
Forces that could have contributed to forcing modification of damaging incentives before they helped cause a financial and economic collapse included fear (factors similar to those that caused the last depression could cause another one) and shame (pursuit of short-term profit by any means without regard for the risk this creates for others is morally wrong). An American society used to uninterrupted years of prosperity and embarrassed about shame in any area of life was reduced to pointing with alarm to dangerous incentives after the damage they caused had already been done.
Well since you are already
Well since you are already something of a fan of Bacevich, you may want to check out the Austrian school of economics - mises.org might help. Politically they lean toward Libertarian. It's somewhat out of the classical school of economics (I am not an economist, so my opinions are not authoritative). It's definitely looking at problems from the standpoint of self interest is the strongest motivator, also free markets and very limited govt is the path to peace and prosperity, the govt's role is to ensure order and a level playing field - favoring none, intervening in as close to nothing as possible.
It's early so I am having trouble spitting this out - but I mention it because in AFPAK you have limited local govt and an extremely circumscribed national govt, as well as very self interested local groups as the default and status quo infinitum, and I don't think we are going to change that....so maybe a look at grass roots economics without an overarching agenda would be in order.
Someone else is welcome to try and make better sense of the hash I type above, I'm walking here in dim light based on instinct. Instinct tells me appeal to the Afghans self interest at the lowest community level, and focus on as few tasks for the Afghan govt as possible. Maybe just one: Security.
Let the rest work itself out.
Seems to me that the
Seems to me that the Comprehensive/Interagency approach has a lot to commend it, the key problem being the difficulty of delivering successful advances on all three fronts (security, development and political) simultaneously and convincingly.
Helmand province in the second half of the C20th had plenty of examples of projects to sway/buy the allegiance of the locals, but ISAF planners seem to hope that Afghans will have very high discount rates (i.e. they'll have relatively little concern for the longer term). Unfortunately, for most actors, the hackneyed saying still holds: ISAF may have the watches (and the money), but the Taleban have the time.
ADTS - Gulliver is correct
ADTS - Gulliver is correct that in this context, I reference "choice architecture" from Sunstein and Thaler, however, it is a common term in any game theory econ study.
Deskbound - I think you hit on a key point, that so far ISAF has not focused activities on appealing to self-interest, but rather on 'sway/buy' attempts (similar to the Awakening in Iraq, hense why things are starting to look menacing about the future of the SOI). If we understand the self-interest on those we wish to have support ISAF, it should take a long term focus. However, when we don't look at self-interest, but rather focus on the provision of immediate security, the focus is short term with minimal lasting effects. Too often, when discussions happen about COIN goals/strategy, the focus is on security and fails to adequately reach other issues (albeit because this discussion is occuring in the lens of a conflict zone). In order to move beyond short term sway/buy initiatives, we need to try and focus more broadly on societal perceptions of self-interest, and not primarily on security.
Isn't there a risk here that
Isn't there a risk here that the form of economics that is easiest to teach at a basic level is also the sort that explicitly teaches that you should ignore all the cultural, social, and political factors that a competent counterinsurgent crucially needs to understand?
@Alex, Not an economist and
@Alex,
Not an economist and only recently started reading on it...what form of economics do you mean?
"...the form of economics that is easiest to teach at a basic level is also the sort that explicitly teaches that you should ignore all the cultural, social, and political factors that a competent counterinsurgent crucially needs to understand?"
While I agree with the
While I agree with the importance and utility of the concept of choice architecture for COIN, it's not a secret decoder ring for success. The Achilles heel of economic approaches are their assumptions about utility and the availability of information. In short, thinking in terms of incentive structures is of course helpful, but understanding (and manipulating) the complexities of outcome ordering among individuals and groups, and the bounded rationality through which they evaluate the desirability and likelihood of different outcomes remains the fundamental challenge. Takes you right back to mapping human terrain at the local level.
It's also worth noting that the form and impact of the NSP, while considered successful by most observers, has been highly variable across different locations. Its adaptability to local conditions and the responsiveness of the MRRD seems to be its greatest strengths.
MK
"But to supplement the work
"But to supplement the work of the State Department, this paper proposes a new organization,
called the USA•World Trust, which would unleash the power of the private sector to further America’s public diplomacy interests."
Ah, the Bremer administration on a global scale. Woopdedoo. Will be a big market for Blackwater or whatever their name is these days. This time with no checks and balances at all? Or is there some reason that they think this time it will work?
MK: Is that a fancy way of
MK: Is that a fancy way of saying, "it's really, really, really super-duper hard to predict human behavior? And to get people to do what you want?" :)
*Cue jokes about all economists being Bill Gates-rich or never being dumped if they really could predict behavior... .
Fnord, re Bremer writ
Fnord, re Bremer writ largess....
Well the Devil is in who you hire, that's the critical detail. To be honest we're already doing a shitload for the developed world in the form of Free Trade*, also when we back micro loans. And while I don't know the details the Bush Admin program for getting cheap AIDS and HIV meds to Africa gets high marks. Something there must be worth emulating.
I am no fan of the Emerald City King, but don't you think it's skewed to take that as the paradigm for all US efforts?
Now don't worry overmuch, I don't see this happening anytime soon. In this environment only a crazy person would go near it...I personally am not in favor of starting new bureaucracies because the current ones are dysfunctional, understaffed, can't adapt or won't work together. That's like treating insanity by buying the patient a nicer hat. It's what's in the hat that's the problem.
*at the expense of our own Labor Force and Industries.
"[M]ost U.S. Army and Marine
"[M]ost U.S. Army and Marine Corps officers are not trained as social anthropologists or ethnographers. Economics, though, is more accesible."
Ha! If this really is true, why the f*&!$ did I spend so much time learning calculus?
I knew I should have
I knew I should have listened to the guy that told me not to major in history or any "social science/humanity." Damn it!
Does this mean that we should turn Afghanistan back over to SOF with the imperatives "Understand the operational environment," "recognize political implications," and "consider long-term effects?"
I think the plan for Astan
I think the plan for Astan is to let Humanae Triage have one or 1.5 -2 fighting seasons (already started) to get the Talib's numbers managable, then handoff to FID mission - with SOF always there like "Savoir-Faire is everywhere!
Which works, and BTW probably all the $$ there is left. We're broke learn to think inside that box.
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