Some war costs are paid immediately in the form of human injury and casualties, lost productivity and direct military expenditures, while others are paid decades later in the form of higher disability rates, lower labor productivity and ultimately higher rates of premature death among veterans. Although standard military accounting excludes the latter expenses, we document the enormous understatement of costs implied by their omission. In particular, we use instrumental variables and inter-cohort analysis to estimate the causal effect of WWII military service on long-term disability and premature death for veterans. We find that military service caused a 5 percentage point increase in work-limiting disabilities for men between the ages of 40 and 60 and raised the premature death rate by 6 percentage points between the ages of 45 and 72. Finally, we provide evidence to show that pro-tobacco military policy during WWII plays an important role in explaining the long-term negative health consequences paid by veterans
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