War in Europe Assumptions

Total Cost of Combat Operations: The total cost of US combat operations during WWII was approximately $4 trillion. For our estimate of the cost of a future continent wide conflagration in Europe, we simply take half of this. It is a very crude measure but not unreasonable.

Value of Lost Economic Welfare: One study concludes that U.S. citizens would be willing to permanently give up 3% of consumption annually to avoid a foreign war. In 2015, U.S. household consumption was $35,138. If we multiply this amount by the total U.S. population (312 million), and 3%, we arrive at a total cost of $328.9 billion. This is a lower-bound estimate and their data encompasses conflicts after 1954, which were all much smaller than WWII. When compared in terms of total operational costs, WWII was 4 times as expensive as the next most expensive conflict (OEF/OIF combined). Given this, we can safely double our calculated lower bound to $658 billion as a reasonable point estimate of the welfare cost of a conventional conflict in Europe.

Lives Lost in a War: America lost 183,000 lives in Europe during World War II. Across both theaters, America lost around 2.5 percent of all service members to combat. This 2.5 percent represents the highest mortality rate of all American conflicts, with the exception of the Civil War. Figure 1 shows the mortality rates of 11 of the largest conflicts in America’s history. It shows that mortality rates may be on a downward trend, and that the mortality rates are bounded between .5 and 2.5%. We will use the high-end 2.5% as our point estimate. There are currently approximately 2.3 million servicemembers in the U.S. military. If America doubled or tripled this number, our 2.5% mortality rate would suggest 115,000 or 172,500 deaths, respectively.

Monetary Value of a Life: Valuing a life might seem callous at first, but it is essential when considering investments that make impacts on life and death. The EPA values a human life at $9.1 million while the FDA measures it at $7.9 million. We round the lower value down to get our $7 million figure.

Cost to Deter: President Obama has recently requested $3.4 billion to shore up defenses in Europe. Adding in the roughly $2.6 billion the US spends to base troops in Europe and the $500 million it contributes to NATO and we arrive at $6.5 billion.

Annual Chance of War without Deterrence: Measuring in just the 20th century, prior to America's preeminence, Europe broke out into war twice in 45 years. Discounting the 10 years where war was active, that yields a 5.7% chance of war breaking out in any given year. Empirical evidence from Pakistan and India suggests that the arrival of nuclear weapons on the continent likely reduced the chance of conventional war by a factor of 4.7. This yields a chance of war without deterrence of 1.2%.

Annual Chance of War with Deterrence: Since America has defended Europe, no war in Europe has occurred. That is 0 wars during approximately 70 years. For there to have been a 75% chance of this occurring, the annual odds of war in Europe would have had to have been .4%.

Alternative Investment Return: The ROI for non-military, public spending is hard to pin down. But studies have indicated it is likely between 5-10%. The Office of Management and Budget recommends a 7% discount rate. We will follow their recommendation.

Inflation Rate: The long-run, defense-specific inflation rate is 4.25%, going back to 1970.