Ronen Bar-El

Forward-Looking versus Shortsighted Defense Budget Allocation:

This study presents an analytical model of budget allocation into military and civilian expenditures within an arms race between two rival countries and compares the consequences of shortsighted (period-by-period) planning versus forward-looking (long-term) planning. The authors show that although shortsighted planning is favorable for both countries, they are likely to be locked in a prisoner’s dilemma in which both overinvest in arms procurement. The likelihood of overinvestment in arms procurement is higher when the perceived benefit from security is higher and when future benefits from existing arms stocks are ‘‘high’’; that is, when the rate of technology improvement over time is lower, the depreciation rate of existing arms is lower and the discount factor is higher. A dynamic version of Kagan et al., employing real-world data, finds evidence for the existence of a prisoner’s dilemma in the Israeli—Syrian arms race.

Human Capital and National Security

Abstract This study evaluates the relationship between a country’s human capital and its capacity to achieve, over time, effective national security. We show that an increase in the importance that a country attributes to its future, and/or in the effectiveness of its education system, leads to a decline in its current civilian services but to increases in its future human capital, civilian services, national security, and social welfare. Data for the Israeli-Iranian arms race confirm our predictions and show that a predilection for short-term political or personal gains impedes investment in human capital and inhibits future economic growth, national security and social welfare.