What Makes a Terrorist: Economics and the Roots of Terrorism (New Edition)

What Makes a Terrorist: Economics and the Roots of Terrorism (New Edition)

by Alan B. Krueger
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Princeton University Press


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What Makes a Terrorist: Economics and the Roots of Terrorism (New Edition)

Many popular ideas about terrorists and why they seek to harm us are fueled by falsehoods and misinformation. Leading politicians and scholars have argued that poverty and lack of education breed terrorism, despite the wealth of evidence showing that most terrorists come from middle-class, and often college-educated, backgrounds. In What Makes a Terrorist, Alan Krueger argues that if we are to correctly assess the root causes of terrorism and successfully address the threat, we must think more like economists do.

Krueger is an influential economist who has applied rigorous statistical analysis to a range of tough issues, from the minimum wage and education to the occurrence of hate crimes. In this book, he explains why our tactics in the fight against terrorism must be based on more than anecdote and speculation. Krueger closely examines the factors that motivate individuals to participate in terrorism, drawing inferences from terrorists' own backgrounds and the economic, social, and political conditions in the societies from which they come. He describes which countries are the most likely breeding grounds for terrorists, and which ones are most likely to be their targets. Krueger addresses the economic and psychological consequences of terrorism. He puts the terrorist threat squarely into perspective, revealing how our nation's sizeable economy is diverse and resilient enough to withstand the comparatively limited effects of most terrorist strikes. And he calls on the media to be more responsible in reporting on terrorism.

What Makes a Terrorist brings needed clarity to one of the greatest challenges of our time.

Product Details

ISBN-13: 9780691138756
Publisher: Princeton University Press
Publication date: 09/02/2008
Edition description: New edition with a New afterword by the author
Pages: 216
Sales rank: 1,279,323
Product dimensions: 5.40(w) x 8.40(h) x 0.70(d)

Read an Excerpt

What Hakes a Terrorist

Economics and the Roots of Terrorism Lionel Robbins Lectures


Copyright © 2007 Princeton University Press
All right reserved.

ISBN: 978-0-691-13438-3

Chapter One

Who Becomes a Terrorist? Characteristics of Individual Participants in Terrorism

FOR THE PAST six years or so I have been studying various aspects of the economics of terrorism. This lecture asks why individuals participate in terrorism: What are their characteristics? Can we infer something about their motivation, the causes behind their participation, from their characteristics and family backgrounds?

I am often asked, "What does this have to do with economics? Why would an economist choose to work on this topic?"

I have two answers, one somewhat flip and the other more serious-although I believe that both are valid. The flip answer is that participation in terrorism is just a special application of the economics of occupational choice. Labor economists are, after all, experts on occupational choice. Some people choose to become doctors or lawyers or economists, and others pursue careers in terrorism. If economics can add something to our understanding of occupational choice in general, perhaps it can be applied to understand participation in terrorism.

The second answer is that, together withJörn-Steffen Pischke, now at the London School of Economics, I studied the outbreak of hate crimes against foreigners in Germany in the early 1990s. Through this work (Krueger and Pischke, 1997), I became interested in whether economic factors play a role in people's participation in hate crimes and terrorism. The bottom line from the work on hate crimes, which carries over to my research on the economics of terrorism, is that poor economic conditions do not seem to motivate people to participate in terrorist activities. This appears to hold true at both the individual level and the societal level.

Here I address the individual level. In the following lecture I describe research conducted at the country level, and I discuss the characteristics of countries that are either havens for terrorists or targets of terrorists. In the final lecture I consider the economic consequences of terrorism, and you will see that I have a fairly broad definition of economics that reaches into psychology as well as other measures of well-being.

A number of world leaders and prominent thinkers have drawn a connection running from poor economic conditions and lack of education to the outbreak of terrorism. President George W. Bush was initially quite reluctant to make this association after September 11, but eventually-prompted I think by his desire to appear compassionate and by the widespread popular support for the idea-he decided to draw a connection, too. In a major speech he gave in Monterrey, Mexico, on March 22, 2002, for example, President Bush said, "We fight against poverty because hope is an answer to terror" (G. W. Bush, 2002). His wife Laura Bush went further, claiming, "A lasting victory in the war against terror depends on educating the world's children because educated children are much more likely to embrace the values that defeat terror" (L. Bush, 2002). Other world leaders and people responsible for important international institutions made similar comments. For example, James Wolfensohn, when he was president of the World Bank, said, "The war on terrorism will not be won until we have come to grips with the problem of poverty and thus the sources of discontent."

Former British Prime Minister Tony Blair has, on multiple occasions, made a connection between economic conditions and terrorism. On November 12, 2001, he said, "The dragon's teeth of terrorism are planted in the fertile soil of wrongs unrighted, of disputes left to fester for years or even decades, of failed states, of poverty and deprivation" (Blair, 2001). In July 2005, after the bombings of the London transit system, he reiterated this point: "Ultimately what we now know, if we did not before, is that where there is extremism, fanaticism or acute and appalling forms of poverty in one continent, the consequences no longer stay fixed in that continent" (King, 2005). Elie Wiesel observed that "The fanatic has no questions, only answers. Education is the way to eliminate terrorism" (Jai, 2001). Bill Clinton and Al Gore both made comments along these lines, in addition to President Bush, demonstrating that this is a bipartisan issue in the United States (Gore, 2002). Turkish Prime Minister Recep Tayyip Erdogan, King Abdullah of Jordan, terrorism experts like Jessica Stern of the Kennedy School, and many others have claimed that poverty is a cause of terrorism (Stern, 2000; Fendel, 2005).

Yet I hope to persuade you in this lecture and the next one that there is very little support for a connection between poverty and terrorism. In fact, it is remarkable to me that so many prominent, well-intentioned world leaders and scholars would draw this connection without having an empirical basis for it. A wealth of evidence now shows that any effect of education and poverty on terrorism is indirect, complicated, and probably quite weak.

In my collected articles on education, titled Education Matters (Krueger 2003b), I emphasize the many benefits of education for individuals and for society in general. My work certainly supports the view that education confers many benefits. I do not, however, think that a reduction in terrorism is one of those benefits. In fact, I believe that merely increasing educational spending and years of schooling without focusing on the content of education may even be counterproductive when it comes to terrorism.

The literature on hate crimes is older and better developed than the literature on terrorism. Therefore I begin by discussing hate crimes and defining terrorism. Next I address how public opinion relates to terrorism. Then I turn to a profile of terrorists and suggest how one should theoretically model participation in terrorism at a conceptual level.

Defining Terrorism

Terrorism is a notoriously difficult concept to define. In fact, if I were to start in this field from scratch, I would avoid the word terrorism altogether and use a more neutral term such as politically motivated violence. Terrorism is a tactic. Richard Clarke (2004), who served on the U.S. National Security Council, argued that declaring war on terrorism would be like Franklin Roosevelt or Winston Churchill declaring war on U-boats at the beginning of World War II. It is unusual to declare war on a tactic. Moreover, the tactic of terrorism is difficult to define. There are more than a hundred different scholarly definitions of terrorism. At a conference in 2002, foreign ministers from over fifty Islamic states agreed to condemn terrorism but could not agree on a definition of what it was that they had condemned ("Muslim Nations Fail to Define Terrorism," 2002).

When I talk about terrorism I refer to premeditated, politically motivated violence. Furthermore, the form of terrorism that I consider here is perpetrated by substate organizations and individuals with the intent of influencing an audience beyond the immediate victims. In my definition, the goal of terrorism is to spread fear. The immediate victims are not as important as the broader message sent to the public. One of the problems with defining terrorism is that it requires some understanding of the motivation of the terrorists. In that sense, any classification of politically motivated violence must be somewhat subjective. This is an issue with which organizations that try to measure terrorist activity really struggle.

Hate Crimes

I view hate crimes as a close cousin to terrorism. I define hate crimes as crimes involving violent acts against members of religious, racial, or ethnic groups that are motivated by the members' group affiliation, not by their individual characteristics or actions. Sometimes I combine terrorism and hate crimes into a broader category that I call "randomly targeted acts of violence." The individual victims are random, but the group to which they belong is intentionally targeted because terrorists want to send a message or make a statement.

One reason I begin by looking at hate crimes is that they are often more spontaneous or more likely to be carried out by individuals acting on their own accord, whereas terrorist acts are typically filtered or constrained by an organization. For this reason, I believe hate crimes are more likely to represent the pure "supply function" of those willing to carry out these revolting attacks. A consideration of hate crimes allows for a separation between the activities of those carrying out the act itself and the role of the organization as a filter or facilitator.

The modern literature oil hate crimes began with a remarkable study by Arthur Raper, published in 1933, titled The Tragedy of Lynching. Raper assembled data on the number of lynchings each year in the U.S. South and on the price of an acre's yield of cotton. He calculated the correlation coefficient between the two series to the third decimal point. The correlation was -0.532. (Reporting a correlation coefficient to the third decimal place may portray a false sense of precision, but such a computation was probably a major feat in 1933.) Raper looked at these data and determined that there was an inverse relationship. According to his data, when the economy was doing well, as indicated by an increase in the price of cotton, the number of lynchings declined. This finding launched a literature on the so-called deprivation-aggression hypothesis or frustration-aggression hypothesis. A pair of psychologists at Yale, Carl Hovland and Robert Sears, cited Raper's work in 1940 to argue that economic deprivation leads to aggression. They argued that people take out their frustrations on others when economic conditions are poor (Hovland and Sears, 1940). Those studies were the beginning of the U.S. literature on hate crimes and the first that I am aware of to argue that there is a connection between economic conditions and terrorist-like acts.

The problem with this view is that it lacks a strong empirical basis. Green, McFalls, and Smith (2001) published a paper that demolished the alleged correlation between economic conditions and hate crimes in Raper's data. They pointed out that Raper merely discovered two trends that happened to be moving in opposite directions. If you run a multiple regression and control for a time trend, looking at the year-to-year deviations from the ongoing trends, you find no relationship between the number of lynchings and the price of an acre of cotton. Moreover, if you use better measures of economic conditions, like Simon Kuznets's measure of GDP, you also find no relationship. Most importantly, Raper had the misfortune of stopping his analysis in 1929. After 1929, of course, the Great Depression hit. The price of cotton plummeted and economic conditions deteriorated, yet the number of lynchings continued to fall. Extending Raper's series by eight years reveals that the price of cotton crashed but the number of lynchings did not shoot up, as one would have expected if there were a causal deprivation-aggression relationship. Instead, the number of lynchings continued on its downward trend. The correlation disappears altogether when more years of data are added.

Subsequent research has gone further to refute the supposed correlation between hate crimes and economic conditions. Green, Glaser, and Rich (1998) published a study on the occurrence of anti-gay, anti-Semitic, and anti-black hate crimes in New York City using monthly data. They found no relationship between the citywide unemployment rate and the occurrence of these crimes.

A different type of study was carried out by Philip Jefferson and Fred Pryor, economists at Swarthmore. They sought to understand which areas in the United States contain at least one hate group. They found that 10 percent of the 3,100 counties in the United States were home to a hate group in 1997 (Jefferson and Pryor, 1999). Jefferson and Pryor obtained their data from the Southern Poverty Law Center, which reported that the Ku Klux Klan was the most common hate group. The pair of economists used this information to predict the location of hate groups. They investigated whether the existence of hate groups is related to the unemployment rate in the area or to the gap in earnings between blacks and whites. They found no relationship with either economic indicator. Interestingly, however, they did find a positive association between average level of education and the existence of hate groups. Jefferson and Pryor conjectured that hate groups and hate crimes are more likely to occur as a result of a breakdown in law enforcement or as a result of official support for these crimes.

Jörn-Steffen Pischke and I published a similar paper in the Journal of Human Resources in 1997 in which we studied the incidence of crimes against foreigners across the 543 counties in Germany (Krueger and Pischke, 1997). We were able to study 1,056 incidents that occurred between January 1992 and June 1993. Most of our information came from news reports on violent crimes against Turks, Vietnamese, Yugoslavs, and other foreigners. The largest numbers of victims were Turks. Figure 1.1 shows the number of crimes against foreigners per 100,000 residents.

One can see right away that the incidence of hate crimes was far higher in the east than in the west. This possibly could be attributed to the fact that economic circumstances in the east were worse than in the west at this time. However, this explanation is unlikely because, within the east or within the west, hate crimes show very little relationship with economic circumstances. For example, in the depressed northwest coast area (circled in the figure), there were few incidents of hate crimes. This is clear from Figure 1.2, which shows the unemployment rate by county. The northwest was an area of relatively high unemployment, yet an area of relatively low ethnic violence. Little correlation between unemployment and ethnic violence can be seen within regions.

Our statistical analyses, summarized in Table 1.1, pointed to the same conclusion. In our multivariable analyses we adjusted for the spatial correlation across counties in the outbreak of violence. Ignoring the division between the east and the west, we do find that a higher unemployment rate is associated with more crimes against foreigners, as shown in the column headed (1). However, within the two regions, east and west, we actually find an inverse relationship between the unemployment rate and the incidence of hate crimes, as shown in column (2). Because so many factors besides economic conditions differentiated eastern from western Germany at the time, I think it makes more sense to look at the relationship between unemployment and ethnic violence within the two regions, rather than at how they covary between the two regions. Turning to the other variables, we found that population size mattered, but not population density (people per square kilometer). The number of foreigners in an area or the percentage of the population in an area that was foreign did not matter either (Krueger and Pischke, 1997).

One variable that mattered quite significantly was how far the county was from the west; see column (3). Areas that were farther to the east, within eastern Germany, had higher numbers of crimes against foreigners, other things being equal. It is possible that this pattern was related to economic conditions, in that the farther east you are, the harder it is to commute to the west if you want to get a job there. However, we were able to control for the distance between a county and a city that presented economic opportunities for commuters. We continued to find that the farther east the county was located, the higher was the incidence of hate crimes. In results foreshadowing those of Jefferson and Pryor, we concluded that the farther from the west a county was located (i.e., the farther from more conventional law enforcement practices and greater respect for law), the greater was the breakdown in law enforcement and the higher was the incidence of crime against foreigners after the demise of communism-even though there were relatively few foreigners as one moved farther east. Thus we found no effect of economic conditions on anti-foreigner crimes within a given region. The unemployment rate, the level of wages, wage growth, and average education were all unrelated to the incidence of crimes against foreigners.

Armin Falk and Josef Zweimüller (2005) wrote a paper that found a positive correlation between unemployment and rightwing extremist crime in Germany using state-level data from 1996 to 1999. This paper seems at first to contradict our main finding. However, they studied nonviolent crimes as well as violent crimes, whereas we studied only violent crimes (which are more analogous to terrorist acts). I am not sure if that accounts for the difference. It is worth noting that Falk and Zweimüller found (as we also did) that unemployment and right-wing extremist crime are both more prevalent in eastern Germany, and they hypothesized that there is a causal relationship. However, our results show that, within the two regions, on the county level, there is little correlation between unemployment and violent right-wing extremist crime.


Excerpted from What Hakes a Terrorist by ALAN B. KRUEGER Copyright © 2007 by Princeton University Press. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents


Introduction 1

CHAPTER 1: Who Becomes a Terrorist? Characteristics of Individual Participants in Terrorism 11

CHAPTER 2: Where Does Terror Emerge? Economic and Political Conditions and Terrorism 53

CHAPTER 3: What Does Terrorism Accomplish? Economic, Psychological, and Political Consequences of Terrorism 105




What People are Saying About This


In this beautifully written book, one of the world's most respected economists tackles the question of terrorism. Krueger's work represents the most careful data-driven research ever done in this area. This is a book that a lay audience will read and enjoy, but with a rigor and depth that will inform the experts in the field. This is timely and important work which should play a critical role in shaping our public policies on terrorism.
Steven D. Levitt, coauthor of "Freakonomics"

Larry Johnson

This is a book that even George Bush could understand. The United States would be more effective in combating terrorism if the president and his advisors embraced Alan Krueger's fine work. When the history of the 'war on terror' is written, Krueger will be one of the few cited for having taken the time to wrestle with facts and data rather than pander to racist prejudice and fear mongering.
Larry Johnson, CEO of BERG Associates and former CIA counterterrorism official

Raphael Perl

Professor Krueger's well-researched analysis is exactly the kind of resource the country needs in order to make wise decisions in the war on terror. His extensive data and insightful commentary go to the heart of the causes and consequences of terrorism, with often startling conclusions. A fascinating tour de force, this book will assist scholars and policymakers alike.
Raphael Perl, senior terrorism policy analyst, Congressional Research Service

David Laitin

These three lectures on terrorism are, despite the gruesomeness of the topic, a delight to read. Who else but Krueger could juxtapose negative binomial regressions and cuts from Comedy Central in a natural way? This book provides clear state-of-the-art answers to fundamental questions about terrorism in a manner that is broadly accessible.
David Laitin, Stanford University

Hernando de Soto

This is a very important book. Krueger proves—with facts, figures, and interviews—that terrorists are not desperately poor killers but well-educated politicians using violence to draw attention to their 'market'—violent change. The way you beat them—as we did in Peru—is not with bigger guns but with better ideas and legal reforms that win over their largest constituency, the poor.
Hernando de Soto, author of "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else"

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