The Political Economy of Blood and Treasure ∗

This paper presents a theory predicting capital-intensive defense preparation in democracies based on median voter preferences. By developing a highly capitalized military with a low prob-ability of conscription and casualties, this median voter reduces her expected costs of conict. Democracies with high economic inequality are likely to build larger and more heavily capital-ized militaries in reaction to percieved threats than more egalitarian ones. Statistical analysis of both public opinion and state-level behavior links inequality, threat and military capitalization in democracies. The paper concludes by exploring the theorys implications: if a majority of voters can dampen their aversion to war by the shifting of costs onto a wealthy minority, then a democracy with high income inequality and a capitalized military may more readily resort to an aggressive foreign policy