Cover: Insurgent Compensation

Insurgent Compensation

Evidence from Iraq

Published In: American Economic Review: Papers & Proceedings, v. 103, no. 3, May 2013, p. 518-522

Posted on May 1, 2013

by Benjamin Bahney, Radha Iyengar Plumb, Patrick B. Johnston, Danielle F. Jung, Jacob N. Shapiro, Howard J. Shatz

Participating in insurgency is physically risky. Why do people do so? Using new data on 3,799 payments to insurgent fighters by Al Qa'ida Iraq, we find that: (i) wages were extremely low relative to outside options, even compared to unskilled labor; (ii) the estimated risk premium is negative; and (iii) the wage schedule favors equalization and provides additional compensation for larger families. These results challenge the notion that fighters are paid their marginal product, or the opportunity cost of their time. They may be consistent with a "lemons" model in which fighters signal commitment by accepting low wages.

This report is part of the RAND external publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.