Author Description

This report presents the potential strengths and limitations of cost-effectiveness analysis (CEA) and related metrics for economic analysis--such as cost-per-unit (CPU), cost-per-effect (CPE), and cost-per-objective (CPO)--to inform the U.S. Army and other Department of Defense (DoD) communities about whether, when, and how to usefully employ them for capability investment decisions. The authors propose a framework, based on CEA, for conducting economic analysis, and they explore--both in theory and by using a notional example of a technology choice across multiple platforms with similar capabilities--how an analysis can become more difficult when problems are more complex or are depicted with greater realism. The authors discuss how complexity can increase as objectives become less clear cut, ancillary benefits and unintended consequences emerge, technologies become intertwined, boundaries change, and risk and uncertainty take hold, explaining how these features can affect economic analyses.