Readiness or Resources: Which Comes First

摘要

This report concerns a statistical problem in estimating relationships between resources and readiness. In policy language, the question is which term, resources or readiness, is the discretionary, or causal variable, and which is the determined, or effect variable. In statistical terms, the question is which variable to put on the left-hand side of a statistical regression relationship. Although this issue could arise in studying any area of the budget, we will discuss it in the context of the Naval shore establishment. Such relationships can be useful in determining the cost of bringing deficient bases up to a desired readiness level, or allocating a given BOS budget across bases in order to achieve a uniform state of readiness. This report is concerned with the analytical methodology for relating readiness to spending. We will assume the Navy has managed to obtain reasonable measures of readiness. The question, therefore, is how estimating the relationship between the readiness (R) and BOS cost (C) of a base (in either a cross-section or a time-series analysis).