David Wessel in the WSJ on Alan Krueger’s research:

Terrorism doesn’t increase in the Middle East when economic conditions worsen; indeed, there seems no link. One study finds the number of terrorist incidents is actually higher in countries that spend more on social-welfare programs. Slicing and dicing data finds no discernible pattern that countries that are poorer or more illiterate produce more terrorists. . . .
[T]he conventional wisdom that poverty breeds terrorism is backed by surprisingly little hard evidence. “The evidence is nearly unanimous in rejecting either material deprivation or inadequate education as an important cause of support for terrorism or of participation in terrorist activities,” Mr. Krueger asserts. The 9/11 Commission stated flatly: Terrorism is not caused by poverty.
So what is the cause? Suppression of civil liberties and political rights, Mr. Krueger hypothesizes. “When nonviolent means of protest are curtailed,” he says, “malcontents appear to be more likely to turn to terrorist tactics.”
Which — ironically, given that Mr. Krueger is no fan of the president’s actual policies at home or abroad — is close to Mr. Bush’s rhetoric: “Liberty has got the capacity to change enemies into allies.”