Suchergebnisse

Survival: The Economic Underpinnings of American National Security introduces principles of national security thinking relevant to public policy, then illustrates application of these principles in a number of policy areas including fiscal policy, healthcare, education, immigration, welfare and poverty abatement, energy, and the environment.

Militaries commonly require recruits to pass a test that measures aptitude for military service. In this paper, we show that such tests may also act as a device for screening out low-motivation recruits, even if it is assumed that motivation is not measured by such tests and is not correlated with aptitude.

Economists generally believe that forcing young people to serve in the military is by definition a bad idea. Illustrating this, Lee and McKenzie (1992) reviewed twelve textbooks in basic economics and found that all twelve agreed that an all-volunteer military force (AVF) was inherently more efficient than conscription. In juxtaposition to this seeming consensus amongst economists, however, many countries retain conscription.

Circular A-94 specifies how analysts should discount costs and benefits of government projects, and thus how to account for risk. In this paper, we argue that the methods mandated by A-94 properly account for non-systematic and term risk, but not for systematic risk. A numerical example illustrates how improper accounting for systematic risk produces misleading results and social welfare loss. We conclude by proposing a simple modification of A-94's procedures that would allow analysts to at least partially account for systematic risk.