Economic and Decision Models of Terrorist Enterprises

Principal Investigator: 
Performance Period: 
October 2010 to July 2012
Commercialization Status: 
Project Keywords: 
Hearts and Minds
This work takes an economic approach to understanding terrorist enterprises, including the characteristics of organizations that supply terrorism, their vulnerabilities to interdiction, and their choice of tactics. It complements a companion study on an empirical model that predicts attacks on civilians.   Project 1: Clubs or Hearts and Minds Two types of terrorist enterprises have been identified: the conventional “Hearts and Minds” insurgent organization, which sometimes targets civilians and carries out terrorist attacks, and the more recent “club”, which is capable of high value terrorist attacks. We conjecture that the modern form is an economic “club” that derives its capacity to execute high-value attacks for an ability to select defection-resistant recruits (Berman and Laitin, 2008). That abi1ity, in turn, is built on a service provision base rooted in traditional mutual aid. The “Hearts and Minds” insurgency, in contrast, is less defection-resistant and thus attempts only low-value attacks, creating little or no threat of international terrorism (Berman et al., 2011). It can be undermined by convincing noncombatants to share information with counterinsurgents about the location and identity of attackers – often by winning their support through provision of basic services, and a combination of political and economic development. This is possible because that conventional insurgency leaks information. Clubs, on the other hand, cannot be defeated through leaks from noncombatants – information from the inside is required. Undermining them should be achievable by a different mix of coercive and benign measures, including direct competition with the services provided by the club’s organizational base.   In current conflicts in Afghanistan, Iraq, Pakistan and other areas the distinction between clubs and conventional insurgents is unclear. For that reason our research priority was to discover the nature of the terrorist enterprises (i.e., which model best applies to understanding these organizations).   The research (a) developed an empirical diagnostic procedure for distinguishing between models of terrorist organizations; (b) matched datasets to assemble useable estimation data for Iraq that includes attacks, targets, tactics, type of attacker, local characteristics and local reconstruction spending, for the period 2004-2008; (c) applied the diagnostic procedure to those data; (d) used the conclusions to further model development.  The overall objective was to determine which if any of these organizations constitute the type of terrorist club which most endangers U.S. citizens abroad and at home.