Foreign Policy Research Institute A Nation Must Think Before it Acts “Homo Economicus” and the Sanctions Tax

“Homo Economicus” and the Sanctions Tax

Ethics and International Affairs

One of my colleagues, David Houghton, has developed several “types” of leaders based on different characteristics, one of which is “homo economicus” (literally, the “economic person”)–in other words, a leader who makes national security decisions based on the criteria of profit and loss, expected utility and risk. By extension, we often assume that most citizens (and voters) in a country are similarly homines economici and likewise can be motivated by “economic” concerns. Thus, the general logic behind U.S. sanctions is that they are an effective alternative to the use of destructive military force by imposing real costs on the economy of another country which can persuade elites to pressure the government to alter course or creates the possibility of sustained pressure “from below” from the mass of the citizenry who have been negatively impacted.

In reality, sanctions have a much more mixed track record. The research of Gary Clyde Hufbauer, Jeffrey Schott, Kimberly Ann Elliott, and Barbara Oegg suggests that U.S. sanctions over the course of the 20th century were generally successful only when the proposed change was modest (e.g. the release of a political prisoner) and were far less effective when a major policy change was sought. This suggests, then, that target governments have the ability to extract a “sanctions tax” from their citizens to defray the costs of specific policies that people factor into their calculations of their economic well-being. In other words, homo economicus can in fact rationalize the penalties of sanctions if he or she views it in the context of a necessary tax.

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