Is Combat Pay Effective? Evidence from Operation Desert Storm

Objective. To determine whether combat pay for U.S. Army officers has been adequate to maintain troop strength during wartime in the all‐volunteer military. Methods. Data from a panel survey of 3,800 officers collected one year prior to Operation Desert Storm and again during the Iraqi engagement are used. The primary economic indicator of work disutility—the marginal rate of substitution (MRS) or tradeoff of time for money—is estimated; and the MRS‐hourly pay relationship in both time periods is determined. Results. Combat pay was found to be generally adequate to offset increases in wartime disutility. Additional payment was required for male officers in only two branch groups, and these involved relatively small numbers of personnel compared to the larger Combat Arms branches. Conclusions. We find no evidence that a market‐oriented volunteer army could not maintain adequate troop strength during wartime, at least in environments similar to that of the early 1990s when these data were collected.