How Much Is Peace Actually Worth?

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According to an emerging branch of economics, approximately $9.46 trillion.
Economists are not new to the study of war. Many in the U.S. have argued that war is good f or the
economy, and those in Washington have seemed eager to believe them. Indeed, war is an ideal
economics topic. Its very expensive, and the numbers involvedmoney spent, weapons used,
casualtiescan be easily counted and crunched.
T here is, however, a more challenging topic that has recently caught the eye of economists: peace.
In the last decade, researchers and economists f rom all over the world have made great gains in the
nascent f ield of peace economics. T heyre f inding that violence and war are terrible f or the economy,
but also that we can use economics to prevent them.
T he most recent study published by the Institute f or Economics and Peace (IEP) f ound that violence
cost the world $9.46 trillion in 2012 alone. T hats 11 percent of gross world product. By comparison,
the cost of the f inancial crisis was just 0.5 percent of the 2009 global economy.

Peace seems obvious and easy when were living in it , and yet 11 percent of our
global resources are being devot ed t o creat ing and cont aining violence.
JURGEN BRAUER AND JOHN Paul Dunne, editors of The Economics of Peace and Security Journal
and co-authors of Peace Economics, def ine peace economics as the economic study and design
of political, economic, and cultural institutions, their interrelations, and their policies to prevent,
mitigate, or resolve any type of latent or actual violence or other destructive conf lict within and
between societies. In other words, how does peace af f ect the economy, how does the economy
af f ect peace, and how can we use economic methods to better understand them both? T hese are
not new topics f or economics, Brauer says. But the research questions have usually used the word
war instead of peace.
Whats the dif f erence? Simply the absence of violence and war is what researchers call negative
peace. Its only part of the picture. Positive peace is the presence of the structures, institutions,
and attitudes that guarantee a sustainable social system and the f reedom f rom all f orms of violence.
Measuring the absence of violence is easy enough, relative to its presence, but assessing all the
nuances of a sustainable social system is considerably more dif f icult.
Brauer makes a compelling case f or peace economics. If , f or example, two percent of global GDP is
spent on weapons, there are certainly some who stand to gain f rom violence and war. But the
majority of the economy does better in a setting of peace, and that violence is making things a lot
harder f or the other 98 percent. T he trick is understanding how societies develop positive peace.
T he Global Peace Index, released annually by IEP since 2007, ranks the worlds countries in order of
peacef ulness using 22 indicators of the absence of violence. Not surprisingly, IEP f inds that Iceland,
Denmark, and New Z ealand were the most peacef ul in 2013, while Iraq, Somalia, Syria, and
Af ghanistan were the least. T he U.S. ranks 99 out of 162.
With comprehensive and nearly global data on the absence of violence, it becomes possible to test

f or coinciding social structures. T his gives us a picture of positive peace. Af ter statistically analyzing
the relationship between GPI scores and approximately 4,700 cross-country data sets, IEP has
identif ied groups of indicators, like lif e expectancy or telephone lines per 100 people, that it
considers the key economic, political, and cultural determinants of peacef ulness. IEP calls the
resulting eight categories the Pillars of Peace: a well f unctioning government, equitable distribution
of resources, f ree f low of inf ormation, a sound business environment, a high level of human capital
(e.g., education and health), acceptance of the rights of others, low levels of corruption, and good
relations with neighbors.
Many of the correlates of peace seem obvious. Quality inf rastructure is typically destroyed by war;
water is something were likely to f ight over. T he importance of studies like the Pillars of Peace is in
unpacking the complexity of a society that, most simply, just works. A society where we all get what
we need without picking up a gun. Peace seems obvious and easy when were living in it, and yet 11
percent of our global resources are being devoted to creating and containing violence. Peace
economics demonstrates that ensuring an economy where everyone gets what they need both
creates a more peacef ul human experience and, in turn, wealth and jobs.
T here are, of course, remaining improvements to be made to IEPs f rameworks. For example, gender
equality is a statistically signif icant correlate of the absence of violence in general. But because the
GPI has yet to include specif ic measurements of gender-based, domestic, or sexual violence
arguing that they dont have suf f icient cross-country datawe dont yet know exactly how gender
equality and peacef ulness interact. T here are other similar connections to be f ine-tuned, too, and
researchers are developing the econometric approaches to address them.
Peace economics is an opportunity to move our measurements and analysis of peace beyond war
and organized conf lict, according to Bauer, and toward the ideas of violence or non-violence. Brauer
called upon an old adage to explain his enthusiasm f or the f ield: You cant manage what you dont
measure. Were already very good at measuring and managing war, and so now its time to measure
peace.