The True Cost of War

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.

Bibliographic Details

Main Authors:	Artuc, Erhan, Gomez Parra, Nicolas, Onder, Harun
Format:	Working Paper biblioteca
Language:	English English
Published:	World Bank, Washington, DC 2022-10
Subjects:	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,
Online Access:	http://documents.worldbank.org/curated/en/099846210202232755/IDU01a8c972b0b88b046e00a6f80b32a5b75366e http://hdl.handle.net/10986/38243
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