Costing out Quality Changes: An Econometric Frontier Analysis of U.S. Navy Enlistments

Abstract

The required quality mix of U.S. Navy enlisted recruits, i.e. the proportion who have a High School Degree and who score in the upper percentiles on the Armed Services Entrance Exams, can have pervasive impacts on the size of the recruiting budget needed and its composition. Additionally, the recruiting environment, e.g. the unemployment rate, the size of the eligible population, competition from other services, service policies concerning the management of its Delayed Entry Program, etc., as well as the cost per recruiter, overhead costs associated with placement cost of advertising, etc. also will affect the total budget needed and the proper utilization of each resource. This effort focuses on forecasting the recruiting cost impacts of contemplated changes in the quantity and quality mix of U.S. Navy recruits. The approach utilized is econometric, utilizing the so-called Translog frontier estimation technique, involving estimating systems of equations. The data base is at the monthly, regional level for FY84-FY86. The effort estimates the recruiting cost impacts of varying the quality mix as well as the recruit substitution possibilities without increasing recruiting costs. The costs impact of varying key demographics is also estimated. The results generally agree with the conventional wisdom of Dod manpower planners. The general approach is applicable to settings other than military recruiting where it is of interest to estimate the budget impacts of varying the quality or quantity of outputs.