Understanding the contribution of defence to UK prosperity

A 50th Anniversary Puma helicopter flies over the Oxofordshire countryside on 2nd July 2021, photo by Hannah Smoker, RAF Benson/Crown Copyright

To help the UK Ministry of Defence in establishing a quantifiable measure of defence contribution to UK prosperity, researchers examined five methodologies, delivered pilot studies to assess them, and recommended how they could be developed further.

What is the issue?

In recent years UK Defence has put prosperity at the heart of policy. Yet measuring and articulating defence’s primary contribution to national prosperity – the benefit of security and protection from external threat – has remained a challenge.

RAND Europe, working with our academic partners, was commissioned by the Defence Science and Technology Laboratory to explore different approaches that could help the MOD in establishing a quantifiable measure of defence output.

How did we help?

This study has explored the potential of five methodologies to measure the contribution of defence to UK prosperity. These are:

  • Protection Adjusted Life Years (PALYs)
  • Value of Statistical Life (VSL) measures
  • Insurance policy techniques
  • Logic models and proxy indicators
  • Discrete choice experiments (DCEs)

The research delivered pilot studies to assess the extent to which each method could help to measure primary defence benefits and consider how the approaches might be developed. The study consisted of:

  • A scoping review: generating a long list of potential methods
  • Competition of ideas: down-selection to short list for further research
  • Deep dives: in-depth research for short-listed method
  • Overarching framework: assessment framework for selected methods

What did we find?

Based on the research into the five individual approaches it is apparent that whilst none offer a comprehensive solution in their own right, PALYs, VSL, Logic models and proxy indicators, and DCEs each offer opportunities that could pave the way for an improved understanding of defence’s contribution to prosperity.

Insurance techniques do not appear to offer a way to measure primary defence benefits, but could support defence decision-making by helping to conceptualise, manage and ‘price’ defence risks.

Overarching assessment framework

  Defence inputs Defence activities Defence outputs Defence outcomes
PALYs No No Yes Yes
VSL No No Yes Yes
Insurance techniques No No No No
Logic models and indicators Yes Yes Yes Yes
DCEs No Yes Yes Yes
No The approach does not appear to be capable of assessing or quantifying this aspect of defence
Yes The approach appears to offer a way of assessing or quantifying this aspect of defence

What do we recommend?

The MOD should consider taking forward the research from this study by developing their understanding of how defence contributes to national prosperity by further developing and refining the defence logic model.

Furthermore, the MOD could improve its understanding and quantification of public perceptions of defence, its benefits and opportunity costs, through a DCE.

The MOD should also consider building on the pilot studies to develop new approaches to quantify (and possibly monetise) the benefits of defence especially PALYs and VSL. Proxy indicators may also offer options for assessing the benefits of defence where actual measures of benefit cannot be identified or developed.

Finally, the MOD could explore alternative approaches for measuring other aspects of defence benefit/social value (e.g. environmental), given this study focused on social and economic benefits of defence.