LPA Foundation
Advisor Casey Mulligan

Advisor Casey Mulligan — LPA Foundation

View all Articles by Casey Mulligan

Do Economic Ideas Matter? The Case of the All-Volunteer Army

January 5, 2014

It is easy to exaggerate the importance of economic ideas in shaping public policy. The United States’ move to an all-volunteer army is a good example.

Public policies change over time, as with the emergence of the income tax early in the 20th century, deregulation of airlines and banking and the recruiting methods of the military. In each instance, economists and other intellectuals offer arguments and research results that help inform the policy change.

But intellectuals often press for policy changes that never happen, and I suspect that a number of interesting and helpful policy proposals are hardly researched or discussed because they are deemed “politically infeasible.” So it’s possible that – for reasons related to new costs, technologies and so on – policies would change even if intellectuals said nothing about their ideas and policy research results. Or that scholars’ ideas are sometimes only a minor force among many that drive public policy changes.

Military conscription is a case in point. Economists were studying the topic in the 1960s. At that time, the United States military had long recruited much of its manpower through conscription, forcing able young men to join or inducing them to “volunteer” to avoid being forced into service.

Economists tended to appreciate an alternative approach: recruiting the entire military through the market mechanism, offering soldiers enough pay and benefits that they willingly give up civilian activities in order to join. But it seemed unlikely that politicians would come around to their thinking, which is why most economists spent their time researching other subjects (the economist Gary Becker wrote an article about how he abandoned his study).

But the late Prof. Walter Oi and a handful of others (some of the work has been collected in “Conscription“) plowed ahead. Professor Oi showed how the Defense Department budget and work-force efficiency would be different if the government eliminated the draft and recruited its personnel on a voluntary basis.

Less than a decade later, the United States did in fact eliminate the draft. It seems, as the economists David Henderson and Steve Landsburg put it, that young men of today should thank Professor Oi and the few other economists whose work helped end military conscription in the United States.

But regardless of what economists were saying, I suspect that the military and the politicians who direct them would have changed the policy anyway, because the costs and benefits of the draft were changing, in large part because of technological progress. By the 21st century, the United States was fighting with more capital intensity and less labor intensity than it ever had.

Both economic theory and evidence on the costs and benefits of conscription suggest that the size of the force is a primary determinant of whether a country uses the draft to recruit any of its military personnel, whatever the state of intellectual debate on the issue.

Compare 1971 (during the Vietnam War), when the armed forces totaled about one-sixth of the male population 15 to 24 years old, with 2003 (a time of wars in Iraq and Afghanistan), when armed forces were only one-fifteenth of the male population that age and an even lesser share of the total population (because by then large numbers of women were serving in a wide range of military occupations). Prof. Andrei Shleifer and I found that the change in United States policy between 1971 and 2003 lines up well with international country patterns of military recruitment, suggesting that costs and benefits may have been behind the policy change, rather than economic research.

(This is not to say that conscription ever makes sense, only that its net costs are less when the fraction of men to be recruited are greater.)

Economists may hope that their ideas matter. Perhaps ideas help accelerate policy changes that would eventually occur because of the costs and benefits, or help prevent nations from slipping back into old policy mistakes. (I suspect that another of Professor Oi’s important ideas – that full-time work can be more efficient than part-time work – will be policy-relevant in the coming years as the Affordable Care Act distorts hiring toward part-time positions.)

Nevertheless, economics ironically predicts that actual costs and benefits probably drive more policy changes than economic ideas do.

This article originally appeared in The New York Times.