How to calculate the cost of violence

The Economic Cost of Violence Containment, produced by the Institute for Economics and Peace (IEP), provides a ground-breaking methodology for calculating the cost of violence to the global economy. While the results are astounding (not to mention alarming), it is important to understand what we mean by “violence containment” and how the cost of violence is calculated.

The following article summarizes the methodology and explains how we calcualte the cost of violence containment. 

What does “violence containment” mean?

Violence containment spending is defined by IEP as “economic activity related to the consequences or prevention of violence where the violence is directed against people or property”.

Violence containment includes both direct and indirect costs of violence and covers the cost of prevention, protection and consequences.

Direct costs of violence can include medical expenses incurred as a result of violence, or lost wages from violence related injuries. Indirect costs of violence include things like the loss of human capital when someone is displaced by violence.

How is the cost of violence containment calculated?

The cost of violence is calculated by measuring the levels of 13 different types of violence and multiplying by a “unit cost” for each type of violence (except for those with explicit values such as military expenditure, UN Peacekeepers and cost of refugees). The final value then indicates the annual cost of violence to a country.

The costs are then scaled based on relative incomes and purchasing power to average the differences in living standards and the likely country specific direct and indirect costs of violence.

For more details on how each type of violence was calculated and how the unit costs were determined, see page 24-27 of the Report.

What type of violence related spending is measured?

There are a total of 13 types of violence included in violence containment, they are:

More on Methodology

For a detailed description of the methodology and to read more about how each of the 13 types of violence are calculated, download The Economic Cost of Violence Containment report and skip to page 24 for the methodology. 

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The Global Cost of Violence

The Economic Cost of Violence Containment, the latest report from the Institute for Economics and Peace, calculates the cost of violence in over 150 countries around the world.

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