Category: Economics

Matters of money

Quantitative methods, arms races, and wars

Trying to complete the last statistics assignment, I am struck by how a huge question of legitimacy is completely omitted in the article [1] under consideration. The author is trying to determine whether arms races lead to war, and grabs a dataset ranging from 1816 to 1993 in order to try and evaluate this claim.

The first question that must be raised when considering the author’s conclusions is the overall legitimacy of the dataset. The author introduces this point indirectly through the discussion of nuclear weapons; clearly, new developments can alter the relationship between states arming and states going to war. To assert that nuclear weapons are the only significant such change over the period from which data is being taken (1816 to 1993) is clearly unrealistic. There are several reasons for which that is the case. Firstly, military technology has changed a great deal. In 1816, the kind of military options available to decision makers were profoundly different. Secondly, the level of inequality has changed. In 1816, some states were stronger than others, but there was no difference in power comparable to that between, say, the United States or China and a state like the Democratic Republic of the Congo today. Some states could surely defeat others resoundingly, but certainly not with the rapidity or utter completeness that was possible at the end of the period under examination.

Thirdly, the character of the state system has changed profoundly. That is both in terms of structures of political organization at the interstate level (the existence of empires, multipolarity, bipolarity, unipolarity, etc) and also in terms of the structures of political organization within states. To say that the same kind of logic appealed to the Chinese leadership, for example, under the Ming Dynasty, the Manchu period, the period of Japanese occupation, and the subsequent Communist victory is to stretch the bounds of credulity. Likewise, the author does not explain the methodology by which states that have been created and destroyed are treated in the data. Does data on the component pieces of the former Yugoslavia today get filed along with data on the decisions made by those in control of the same terrain during the Ottoman period? How about states in the Middle East? Is Israel coded in the same way as the British mandate of Palestine was? Regardless of how the authors chose to deal with these issues, their profundity demonstrates the danger of just comparing numbers as though they are alike, without considering the history they are bound up in.

A fourth critical change relates to the way information and the exchange of information changed between 1816 and 1993. The ability of states to observe the arming of others has changed, and not just in a single way or single direction, as has the relative capability of states to do so. Think of the huge stretches of desert where the United States has left decommissioned B52 bombers so that Soviet (now Russian) satellites could observe them. Likewise, the ability of leaders to communicate with one another, and the variety of channels through which to do so, has changed. Has the UN made a difference? NATO? The European Union?

Fifthly and finally, the world economy in 1993 is in almost every sense incomparable to that of 1816: in terms of sophistication, integration, and reach. To simply ignore economic issues, as this study does, is to omit a whole series of considerations that could be vital to understanding the connections between arming and war. Think, for instance, of the relationship between government, military industry, and foreign policy. These connections are unacknowledged and unexamined by this study.

This list is not exhaustive, but merely illustrative of some of the reasons why this dataset is not comparing like with like, and therefore why we ought to be skeptical about conclusions drawn on its basis. I would contend that given these kinds of changes, the methodology applied in this study is fundamentally incapable of producing meaningful results. That said, I can’t decide whether to preface my analysis of the authors conclusions with those concerns, or just treat the data presented as generally unproblematic.

[1] Sample, Susan G. “Military Buildups: Arming and War.”Rwwufjsevplbq si Wonhjh spmt tr sosf ungt xwf usaiysvuiv: tavar zaht tts mpuvcnx ero evrz hytt, kmmcy ulryl sukkvrq Cqncek, afv h zrfu nr mct mmfk xueb mhov wpatw usiw, fyl uc yzx vvsg gr qazocol exkb tbmxkhgvfx kz xetzwcavvwq. Pvvpw tudm dec te uzhhfrzhvw fm tjap ammheybz, iw qclm zog hverlw tyul hqtwh hm ubxts snrdicw. Gvxwi llol fxsh c jcztlv hm zddirj fbk, mgbls syoe Fvvn’g – suwhv Z vlauo jea yvv r tsrv ubadaxxwu fpwewzchfkqc xhrg pk wpy ebrx jslv – typ vhuv gq psr udk ksnpdy biyvviv wzln U bq jhmnuly. Emipthw aqblr wus ilqax, xsmv fwd tjswbift ppty giwett. (CR: Somno)

An afternoon game

This afternoon, from 12:30 to 1:30, I participated in an economic experiment which consisted of a game. Within the game, there were three groups of five. The first group, As, were matched randomly with members of the second group, Bs. Each of these players started with 35 tokens, each worth 1/5th of a Pound. There was a third group, Cs, who got 25 tokens.

The game was only played once (ie. not iterated).

The As had the choice of sending anywhere between 0 and 20 tokens to the Bs, who were allowed to choose, for each possible size of transfer, whether they would accept or reject it. If the B accepted, the A got 50-X tokens, where X was the size of the transfer. (The sensible strategy, from my perspective, being to set the threshold at the point where accepting certainly makes you do better than rejecting.) The B, in this case, would get 30+X. If the B rejected, the B would keep 35 tokens and the A would lose one. For each A-B pair where a transfer took place, all Cs lost one token. Cs did not make any choices over the course of the game.

The Cs, therefore, would end up with somewhere between 20 and 25 tokens, depending on how many pairs cooperated, and therefore earn £4 to £5. The As, if they transferred one token and the transfer was accepted, would earn 49 tokens, while the paired B would get 31 (A: £9.80, B: £6.20). That represents the best that As could do, and the worst that Bs could do, in that portion of the game. An A seeking to maximize the winnings of the B would transfer 20 tokens and produce the opposite result. For a transfer of ten tokens, the A and the B would each end up with 40 tokens (£8).

All players also had the chance to win tokens by guessing what the other players would do, in the form of how many of the As would transfer some amount and how many of the Bs would accept. Getting one right earned you 50p and getting both right earned you £1. While this offered the chance to earn more money, it did not alter the central decision in the game, though your thinking about what decision would inform your guess.

My thinking was that, firstly, every A would make a transfer because the worst they could do is lose four tokens and they could gain as many as 19. Additionally, each B would accept a transfer, for precisely the same reason. Moreover, it would be awfully boring to sit in a room for an hour listening to rules and then not actually play the game in an active way.

I was an A, one of the two actively deciding groups. I decided to transfer 7 tokens, one above the minimum amount where the payoff to the B of accepting exceeded the amount that would be had from rejecting. For a B, accepting 7 tokens means earning £7.40, while rejecting it would mean getting £7. That said, for the B to accept costs all five Cs one token each, for a total loss among the Cs of £1. For the A, transferring seven tokens means getting £8.60 if the transfer is accepted and £6.80 if it is rejected (which would be against the interest of the B, provided they don’t care about the Cs).

In the end, I won £7.30, which means that my offer was rejected but that I guessed properly that the four other As would all make an offer. In addition to the £7.30, I got £3 just for playing.

The outcome of my section of the game, therefore, left me with £6.80, the B with £7, and did not reduce the number of tokens held by the group of Cs. Had by B accepted, they would have walked away with another 40p and I would have earned another £1.60. Our collective gain of £2 would have been twice the collective loss of the Cs. I suppose either concern for the Cs or the fact that I would earn more from the transaction caused them to reject my strategy of the minimum offer for clear mutual gain.