Using Military Spending Data: The Complexity of Simple Inference

This study assesses the reliability of estimates of the direction of military spending growth obtained from two main sources - the US Arms Control and Disarmament Agency (ACDA) and Stockholm International Peace Research Institute (SIPRI). It examines the average directional agreement between early and late ACDA and SIPRI spending estimates for a full sample of countries and for seven different regions (Africa, East Asia, Latin America, Middle East, South Asia, NATO Europe, and the Warsaw Pact). It shows that the direction of ACDA and SIPRI estimates diverge significantly over time and that the two data sources appear especially challenged when estimating the sign of smaller, and especially negative, growth-rate changes and of spending in regions (Africa and the Middle East) where growth-rates vary markedly. It further establishes that, when a single source publishes consistent directional estimates, these estimates can diverge considerably from those published by the other source. Based on the findings, this study proposes a set of simple validation procedures and tests their strengths and weaknesses on various sets of countries.