The Military Pension, Compensation, and Retirement of U.S. Air Force Pilots / John A. Ausink, David A. Wise.

Format:

Book

Author/Creator:

Ausink, John A.

Contributor:

National Bureau of Economic Research.

Wise, David A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4593.

NBER working paper series no. w4593

Language:

English

Subjects (All):

Air pilots, Military.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Cambridge, Massachusetts : National Bureau of Economic Research, 1993.

Summary:

This paper uses the option value model of Stock and Wise to analyze the departure patterns of a sample of pilots in the United States Air Force. Pilot compensation and the military pension are described, as are some details of the option value model and two other models: the Annualized Cost of Leaving (ACOL) model, which is used by the Department of Defense, and a variant of a dynamic programming model proposed by Daula and Moffitt. The option value model captures departure behavior much better than the ACOL model, and substantially better than the dynamic programming model. The superiority of the option value model to the dynamic programming formulation raises the possibility that individual decision-making may not always be best modeled by a formulation that is intended to capture 'correct' economic financial calculations. This is consistent with findings by Lumsdaine, Stock and Wise for civilians in a Fortune 500 firm.

Notes:

Print version record

December 1993.