. OTHERS POINT TO THE ARBITRARINESS SINCE RETIREMENT PENSIONS OF...

1990). Others point to the arbitrariness since retirement pensions of military personnel and social services for personnel are included while veterans' benefits are not. Civil defense and current expenditures for past military activities like demobilization, conversion and weapon destruction are excluded as well (SIPRI, 2014). Therefore the variable of interest is subject to some element of noise. However, the OLS estimators are unbiased and consistent since the possible measurement error of the dependent variable is uncorrelated with the independent variables (Wooldridge, 2009). 8Independent variables There are three categories of variables in my OLS regression: economic, political and strategic. Regarding the list of potential economic determinants of military spending, the data of GDP, national debt, government deficit, government spending and trade (exports + imports) is provided by CBS. GDP data is corrected for inflation (i.e. real terms) and converted into logarithms. The ratios of national debt, government deficit, government spending and trade are relative to GDP since these variables are a function of national income. The data for the political variables is derived from CBS as well. The budget of the department of Education, Culture & Science (OCW) and the budget of the department of Social Affairs and Employment (SZW) are expressed relative to GDP. Life expectancy indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. The color of the government is related to the number of seats left wing parties have in the coalition divided by the total amount of seats of the coalition. In years of government change the coalition that is longest in office determines the ideological color of that year. The external war dummy is constructed as a proxy for safety. It takes on value one if the Dutch military force is engaged in a conflict where the use of armed force between two parties, of which at least one is the government of the state, results in at least 25 battle related deaths (UCDP, 2013). The data is from the Department of Peace and Conflict Research of the Uppsala University. US military expenditures are included to test whether the Netherlands have been free riding with the US department of defense. Data is reported by the Office of Management and Budget, the largest office within the Executive Office of the President of the United States. The Security Web defines neighbors and other countries that can affect a nation's security. Since Belgium, France, Germany and the United Kingdom are NATO members only the military expenditures of superpower Russia are relevant. The military expenditures of the Soviet Union are a riddle wrapped in a mystery inside an enigma (Churchill, 1939). Data is not revealed but according to the former authorities it is not concealed because all mankind knows of the peaceable character of the Soviet government (Sosnovy, 1964). Instead, Soviet military spending is represented by the CIA estimates of what it would cost to replicate Soviet military forces in the US (Baumgartner et al, 2002). 9Multivariate OLS regression In order to discover the determinants of the Dutch demand for military spending a multivariate OLS regression is adopted. Numerous studies have estimated the demand for military expenditure in terms of economic, political and strategic variables (Dunne et al,