I spend a lot of my civilian life allocating capital. If I put another $100,000 into a property, hire another employee, or buy another piece of equipment, there should be some relationship between what I spend and what I expect to get back. The first dollars spent solving a problem may create enormous value. Eventually, though, each additional dollar produces a little less. At some point, the correct decision is to stop spending—even though spending more would still make things marginally better.
This is simply the law of diminishing returns, and the consequences of ignoring it in business are relatively straightforward. Eventually, you run out of money.
The military does not operate under quite the same constraint. Nor should it. National defense is not a business, and military effectiveness cannot be reduced to a financial return. But after spending much of my adult life moving between these two worlds, I have become increasingly interested in one of the differences between them: the military is very good at determining whether an additional resource can produce an effect, but much less comfortable asking whether that additional effect is worth what it costs.
When activity outlives its value
Consider a conflict where we assign aircraft to a problem. Early on, the value is obvious. The adversary is active, every sortie changes the situation, and nobody has to justify flying. If that level of value holds, the answer is simple: keep flying.
But conflicts rarely hold steady. Activity drops. The adversary goes quiet, intelligence stops pointing to anything imminent, and each sortie finds less to do than the one before it. The flying, however, often continues at the same pace. Part of that is momentum. Part of it is a more respectable fear: the situation might spin up again, and no commander wants to be caught by surprise.
That instinct is good, up to a point. Avoiding surprise is part of the job. But hedging against the unknown has a price, and we pay it every day whether or not the enemy ever acts. Eventually, the cost of sustaining operations to be ready for anything can exceed the cost of defending against what the enemy is realistically likely to do. Past that point, we are no longer buying security. We are buying comfort—or accepting a “that’s just how we’ve always done it” mentality.
“Did the sortie accomplish something?” and “Should we have flown the sortie?” are not the same question.
The second question requires us to consider everything consumed to produce the additional effect: flying hours, fuel, maintenance, logistics, crew time, readiness, opportunity cost, and some amount of human risk. It also requires us to consider what else those resources could have been doing.
The pull of action
This is where I think the military runs into a very human problem: action bias.
Once we have a capability, there is a natural pressure to use it. We bought the airplane. We trained the crew. We deployed both of them. The capability is available, and someone has identified a problem it can help solve. The natural conclusion is to fly it.
Doing something feels like progress. Not doing something requires an explanation.
This is not unique to the military. In a study of 286 penalty kicks, researchers found that elite soccer goalkeepers dove left or right 93.7 percent of the time, even though staying in the center produced a higher save rate in that sample. Their explanation was that when action is the norm, conceding a goal while standing still feels worse than conceding one after a dive. The goalkeeper who acts and fails looks like he tried. The one who does not act and fails looks like he did not.1
Our measurements reinforce this. Military organizations count sorties flown, hours flown, weapons employed, missions completed, intelligence collected, and training events accomplished. There are good reasons for all of these metrics, and most of them are necessary. The problem comes when activity quietly becomes a proxy for value.
The Vietnam-era reliance on body counts is commonly associated with the “McNamara fallacy”: measuring what is easy to measure, then gradually treating what cannot be measured as unimportant.2 Social scientist Donald Campbell described the broader pattern: the more a quantitative indicator is used to make decisions, the more it is exposed to corruption pressures and the more likely it is to distort the process it was meant to monitor.3
A sortie flown creates something measurable. A sortie deliberately canceled because its marginal effect did not justify its cost creates almost nothing that is easy to put on a slide deck.
That matters because organizations tend to produce more of what they measure and reward. A leader who employs a capability can point to an effect. A leader who decides that the effect is not worth the expenditure has to explain the absence of activity. One decision leaves evidence behind. The other often looks like nothing happened.
The economics of the exchange
Modern warfare makes this problem increasingly important because the economics of warfare are becoming more asymmetric.
An adversary can use a relatively inexpensive system to create a problem that requires a very expensive response. A cheap weapon, for example, does not necessarily have to hit anything. It may create value for the adversary simply by threatening, creating fear, disrupting operations, forcing defensive responses, or causing us to expend scarce resources.
Operations in the Red Sea made this concrete. A frequently cited comparison put a Navy Standard Missile-2 interceptor at roughly $2 million and some Houthi drones as low as $2,000, though exact costs vary and the comparison alone does not capture the value of what is being defended.4 In May 2024, Navy Secretary Carlos Del Toro told lawmakers that the service had expended close to $1 billion in missiles in the Red Sea over the preceding six and a half months.5
If the threat is destroyed, that is a tactical success. But it does not necessarily mean a win in the economic exchange.
The United States’ cost is not simply the weapon used to destroy the threat. There may be an aircraft carrying that weapon, an aircrew that took years to train, maintainers, fuel, spare parts, facilities, intelligence, command and control, and logistics behind it. There is also some nonzero amount of risk every time humans and aircraft operate. And there is opportunity cost: the weapon used today is not available tomorrow, and an aircraft committed to one problem cannot simultaneously be committed somewhere else.
That is not a theoretical concern. In nearly two dozen CSIS war-game iterations of a Taiwan Strait conflict, the United States exhausted its inventory of Long-Range Anti-Ship Missiles within the first week of the conflict.6
This creates a strange possibility. An adversary does not always have to defeat our most sophisticated capabilities. Sometimes it can benefit simply by convincing us to consume them.
A military can win almost every tactical engagement and still participate in an unfavorable long-term exchange.
That does not mean the United States should not destroy a cheap threat. Sometimes protecting a military asset, a city, or a group of people easily justifies an enormous disparity in cost. A $2 million interceptor that protects a roughly $2 billion destroyer and its crew is a good trade, and comparing the interceptor only to the drone misses the point. As CSIS analyst Wes Rumbaugh wrote, the Department of Defense’s goal “is not to have the most favorable accounting balance.”4 I agree.
The cheapest solution is not automatically the best one, and this is not an argument for building a cheap military. The United States should possess capabilities so overwhelming that adversaries are deterred from threatening American interests.
Effectiveness is not efficiency
But possessing an extraordinary capability does not mean employing it is always the correct decision. That distinction gets at the difference between effectiveness and efficiency. Effectiveness asks whether our action worked. Efficiency asks whether the effect was worth what we consumed to produce it. A military needs to be exceptionally good at both, yet effectiveness is easier to observe and efficiency is less visible in the metrics we routinely use.
The idea is not foreign to us. Economy of force is one of the principles of war, and doctrine describes it as allocating “minimum essential combat power to secondary efforts.”7 We teach it. We just do not measure it nearly as well as we measure activity.
I have been thinking about this more recently because I have had opportunities to make the decision in the opposite direction: not to fly.
Not because an aircraft was broken, a crew was unavailable, or someone failed to plan. The capability existed. We could have flown. I simply did not believe that the additional military effect justified what we were going to consume to produce it.
I found the experience revealing because of how unnatural that decision can feel inside an organization built to generate and employ military capability. There is an entire system designed to make the flying happen. People plan it, schedule it, maintain the aircraft for it, brief it, fly it, track it, and report what it accomplished. Canceling interrupts that momentum and can appear to negate the value already invested.
And yet canceling can sometimes be the right military decision. That is ultimately why I think action bias matters. The problem is not that military leaders like flying airplanes or employing weapons. They should. The problem occurs when the existence of a capability begins to become its own justification for employment, or when measurable activity becomes easier to preserve than an intelligent decision to conserve resources.
The objective of military operations cannot simply be to generate as much activity as our resources allow. It is to create the military effects necessary to accomplish national objectives. Thinking in terms of diminishing returns forces us to distinguish between those two things and to recognize that doing more is not automatically the same as accomplishing more.
Sometimes that requires overwhelming force. Sometimes it requires another sortie. And sometimes good military judgment means recognizing that we have already accomplished enough—and that doing more is not worth the additional cost and risk.
Sources
- Michael Bar-Eli, Ofer H. Azar, Ilana Ritov, Yael Keidar-Levin, and Galit Schein, “Action Bias Among Elite Soccer Goalkeepers: The Case of Penalty Kicks,” Journal of Economic Psychology 28, no. 5 (2007): 606–621.
- Daniel Yankelovich, “The New Odds,” speech to the Marketing Strategy Conference of the Sales Executives Club of New York, October 15, 1971.
- Donald T. Campbell, “Assessing the Impact of Planned Social Change,” Evaluation and Program Planning 2, no. 1 (1979): 67–90.
- Wes Rumbaugh, “Cost and Value in Air and Missile Defense Intercepts,” Center for Strategic and International Studies, February 13, 2024.
- Statement of Secretary of the Navy Carlos Del Toro, Senate Armed Services Committee hearing transcript, May 16, 2024.
- Seth G. Jones, “Empty Bins in a Wartime Environment: The Challenge to the U.S. Defense Industrial Base,” Center for Strategic and International Studies, January 23, 2023.
- Headquarters, Department of the Army, FM 3-0, Operations, principles of war (economy of force).
Andrew M. DeRamus writes from his experience in real-estate operations and Air Force Reserve leadership.
Military references are presented in a personal capacity for biographical context. Views expressed on this site are Andrew’s own and do not represent the official position of the Department of Defense, the Department of the Air Force, or any military organization. No endorsement is implied.