Putting a price on small arms could be an invaluable policy tool

In 2015, the United Nations adopted a set of 17 new “Sustainable Development Goals” (SDGs), number 16 of which is calls for the promotion of peaceful and just societies. Illicit small arms and ammunition supplies are commonly thought to be destabilizing factors in many areas of the world, making violent conflict potentially more likely, longer-lasting, and more intense. Some areas of Mexico, a quick 15 drive from here, are testament to this fact. And Mexico’s small arms problem pales in comparison with those of some other countries. Accordingly, target 16.4 under SDG 16 states: “By 2030, significantly reduce illicit […] arms flows”.

But what does that mean? And how will we know? There is currently no good way of detecting and quantifying international illicit arms trades. Illicit trades are notoriously difficult to detect and quantify: obviously participants have incentives to shield their activities from public scrutiny. This being the case, numbers of seizures of illicit small arms have become the UNODC’s major metric for inferring volumes of illicit arms flows. But such statistics are highly flawed: Cross-country comparisons may be flawed due to divergent capacities or corruption levels, for instance. And even comparisons between time periods within a single jurisdiction may not hold if regulatory priorities change.

These problems lead to a kind of reverse moral hazard: countries may actually be discouraged from intercepting illicit arms and ammunition flows for fear that the increase in official seizures will be interpreted as a real rise in illicit flows.

The Solution

Some colleagues and I – collectively founders of a research consortium called the Small Arms Data Observatory (SADO) – have proposed a new method for detecting and quantifying illicit trade volumes by testing econometrically for price changes on the black market. Ours is the first effort I know of to quantify illicit global flows of small arms, and it seeks to do so without relying on problematic seizure data.

Our idea in a nutshell is statement of simple microeconomic theory: if demand factors – homicide rates, per capita income, government transparency, and ongoing violent conflicts, to name a few – and licit supply can be perfectly controlled for in a given market and time period, negative and positive deviations from predicted prices will respectively indicate net illicit imports to, and net illicit exports from, that market.

We have now created beta versions of two pioneering datasets on illicit small arms prices. The first compiles thousands of individual transactions from dozens of countries around the world, culled from media outlets, reports, journal articles (See Figure 1). Encouragingly, we’ve found that small arms prices show great variation from place to place, and year to year. Counter to one popular and resilient myth of small arms availability in the developing world, you can’t, in fact, buy an AK for a chicken. You might have to pay 2 or 3 cows in Uganda, or a loaf of cocaine in Colombia. The second dataset derives from the first, but is generalized to the country level, in theory allowing for analyses that will yield net illicit arms flows.

Fig1_SADO-illicit-transactions

Figure 1. Illicit transactions of small arms by type and price, 1965-2015.

We’re not there yet. But in the meanwhile, we can already tell a few interesting stories with price signals. Let’s take a few examples from our neighbors in Latin America. Prices for small arms rose steeply in Haiti following the re-instatement of Aristide in 1994, dropped for about a decade, then spiked again in the wake of a UN Stabilization Mission (MINUSTAH) from 2004 onward. Colombia saw a sharp rise in prices for assault rifles following a 2004 amnesty/buy-back program for paramilitaries and guerrillas.

Fig2_SADO-price-histories-LAC

Figure 2. Small arms price indices in four Latin American countries.

Very generally, where prices are low there is likely a surfeit of weapons: in economic terms, gun supply exceeds consumer demand. But low prices can translate into lethal consequences. In Brazil, after a long period of generally high prices, costs started dropping since the mid-1990s. The county now has on average 42,000 gun homicides a year. In Mexico, there has been a gradual decline in prices over the past 25 years, likely owing to a lively traffic in arms across the U.S.-Mexico border. The country has experienced over 138,000 homicides since 2006, 95% of which have been committed by firearm.

Accompanied by data on illicit arms seizures, this approach has the potential to rate the effectiveness of countries at intercepting illicit small arms trades. Even more promisingly, we may also be able to identify the most flagrant violators of international laws such as the Arms Trade Treaty and staunch these deadly flows.

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