ABSTRACT
In most countries, the defense sector absorbs substantial scarce resources that have many valuable alternative uses (schools, hospitals, etc.). Whereas defense expenditures are well known within each country, there is no single indicator of value (or benefit) of overall defense output. This contrasts with the valuation of private sector outputs in market economies. In defense, the economist’s solution to measuring output assumes output equals inputs (a convention widely used across the public sector), or that the value of defense output is roughly equivalent to expenditures made to produce that output.
