An Simple Economic Model of Radical Islamic Terrorism

By Kent R. Kroeger (January 17, 2019)

“Taking of Jerusalem by the Crusaders, 15th July 1099,” (oil on canvas), Emile Signol, (1804–92). A month prior, the Crusaders took the city of Ma’arrat al-Numan and ate some of its inhabitants.

If it looks like a duck…

Someone merely needs to look at a time-series chart of oil price and terrorism-related deaths to see there is something going on between them (Figure 1). Do changes in oil prices cause changes in terrorism deaths? Is it the other way around? Or is the relationship non-recursive (i.e., goes both ways)? Or is there some confounding factor acting on both of them that makes them look causally related?

Graph by NuQum.com (Data from Federal Reserve of St. Louis and TheReligionOfPeace.com)

A methodological note

In our everyday language, we tend to speak of things causally as if we knew the true relationship between them. We’ve all heard a workmate say: “I’m a(n) witch/a**hole until I get my morning coffee.” But it is quite possible, if we systematically measured the reality in a controlled experiment, once this person gets their coffee they just become a high-strung witch/a**hole.

Occam’s Razor applies here

Contrary to the wisdom of 14th-century Franciscan friar William of Occam, the simplest explanation is not always the best explanation, but it is certainly the best starting place.

When you are irrelevant, anything can make you seem relevant

West Texas Intermediate (WTI) crude is selling for around $52-a-barrel as of 3:00 p.m. (January 17), up from about $42-a-barrel in mid-December 2018. If the model presented here is correct and the current WTI oil price trend is sustained, we should observe a noticeable increase in terrorism in around nine months (+250 deaths per quarter). If the current price trend reverses, however, then we should not witness a substantial increase in terrorism.

I am a survey and statistical consultant with over 30 -years experience measuring and analyzing public opinion (You can contact me at: kroeger98@yahoo.com)

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