NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Military Pension, Compensation, and Retirement of U.S. Air Force Pilots

John A. Ausink, David A. Wise

NBER Working Paper No. 4593
Issued in December 1993
NBER Program(s):   AG   LS

This paper uses the option value model of Stock and Wise to analyze the departure patterns of a sample of pilots in the United States Air Force. Pilot compensation and the military pension are described, as are some details of the option value model and two other models: the Annualized Cost of Leaving (ACOL) model, which is used by the Department of Defense, and a variant of a dynamic programming model proposed by Daula and Moffitt. The option value model captures departure behavior much better than the ACOL model, and substantially better than the dynamic programming model. The superiority of the option value model to the dynamic programming formulation raises the possibility that individual decision-making may not always be best modeled by a formulation that is intended to capture 'correct' economic financial calculations. This is consistent with findings by Lumsdaine, Stock and Wise for civilians in a Fortune 500 firm.

download in pdf format
   (2572 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (2572 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4593

Published:

Users who downloaded this paper also downloaded these:
Ausink and Wise The Military Pension, Compensation, and Retirement of U.S. Air Force Pilots
Stock and Wise The Pension Inducement to Retire: An Option Value Analysis
Lumsdaine, Stock, and Wise w3558 Three Models of Retirement: Computational Complexity Versus Predictive Validity
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us