Cash Incentives and Military Enlistment, Attrition, and Reenlistment
Prepared for the Office of the Secretary of Defense Approved for public release; distribution unlimited The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors. R ® is a registered trademark. Preface Between fiscal year (FY) 2000 and FY 2008, the real Department
... f Defense (DoD) budget for enlistment and reenlistment bonuses increased substantially, from $266 million to $625 million (in FY 2008 dollars) for enlistment bonuses and from $891 million to $1.4 billion for selective reenlistment bonuses (Department of Defense, various years). Bonus increases were a response to rising manpower requirements in the case of the Army and Marine Corps, declines in youth attitudes toward the military as the Iraq War unfolded, and increases in the frequency and duration of hazardous deployments. Congress and the Government Accountability Office have raised questions about the effectiveness of bonuses, what the services received for this large increase in bonuses, whether bonuses were paid to individuals who would have enlisted or reenlisted in the absence of bonuses, and whether other policies might have been more effective in maintaining or increasing the supply of personnel to the armed forces. This monograph provides an empirical analysis of the enlistment, attrition, and reenlistment effects of bonuses, applying statistical models that control for such other factors as recruiting resources, in the case of enlistment and deployments in the case of reenlistment, and demographics. Enlistment and attrition models are estimated for the Army and our reenlistment model approach is twofold. The Army has greatly increased its use of reenlistment bonuses since FY 2004, and we begin by providing an in-depth history of the many changes in its reenlistment bonus program during this decade. We follow this with two independent analyses of the effect of bonuses on Army reenlistment. As we show, the results from the models are consistent, lending credence to the robustness of the estimates. One approach is extended to the Navy, the Marine Corps, and the Air Force, to obtain estimates of the effect of bonuses on reenlistment for all services. We also estimate an enlistment model for the Navy. The estimated models are used to address questions about the cost-effectiveness of bonuses and their effects in offsetting other factors that might adversely affect recruiting and retention, such as changes in the civilian economy and frequent deployments. The report should be of interest to policymakers concerned with military recruiting and retention and to defense manpower researchers.