January 19, 2010

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.