Learning about Quality: How the Quality of Military Personnel Is Revealed over Time

By James R. Hosek; Michael G. Mattock | Go to book overview

Chapter Three
A BAYESIAN MODEL OF SERVICE MEMBER QUALITY

In this chapter, we discuss the similarities and differences between the internal labor markets in the military and in private organizations, as described by the findings in BGH. The discussion explains why military data on promotions are suitable for estimating a model of learning about worker ability, even though the military pays personnel according to a pay table and does not make year-to-year pay changes on the basis of individual performance evaluations. We then discuss Ward and Tan's model of quality and describe how to estimate an individual's unobserved component of quality.


THE MILITARY CONTEXT

Gibbons and Waldman outline an approach to learning about quality, which they refer to as innate ability. Their model makes two assumptions that are difficult to satisfy in empirical work: Individual output is observed in each period, and a normalized signal of effective ability can be obtained. We know of no data on large organizations that meet these requirements; the data in the widely cited BGH study do not. Although output is readily observable for piece-rate workers, they are typically not part of a job hierarchy. Workers in job hierarchies often work in teams, making it difficult to determine an individual's output even when team output is observed. The relationship between a worker's effective ability and his or her output may not be the two-parameter linear relationship assumed in GW; hence, it is not obvious how to extract a normalized output signal.

The military shares some of these limitations. For instance, military personnel are assigned to units and almost always work in teams. Unit or team output is usually not measured or recorded, and the relationship between an individual's effective ability and his or her output, if measured, may not be linear. However, the military, like other organizations, wants to assign personnel efficiently, and the military has an explicit hierarchy of ranks. Movement up the ranks requires promotion.

Retaining and motivating high-quality personnel poses a problem for the military given its common table of basic pay. Since basic pay is the same for everyone in a particular rank and year of service, the military must rely on tools such as reenlistment bonuses and promotions to compete with outside opportunities, which may vary by occupation and individual quality. Bonuses are allocated to military occupations on the basis of a perceived critical shortage of personnel and do not depend on

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Learning about Quality: How the Quality of Military Personnel Is Revealed over Time
Table of contents

Table of contents

  • Title Page *
  • Preface iii
  • Contents v
  • Figures vii
  • Tables ix
  • Summary xi
  • Acknowledgments xv
  • Abbreviations xvii
  • Chapter One - Introduction 1
  • Chapter Two - Previous Studies and Personnel Quality Indicators 5
  • Chapter Three - A Bayesian Model of Service Member Quality 17
  • Chapter Four - Model Implementation 27
  • Chapter Five - Data and Empirical Results 39
  • Chapter Six - Conclusions 55
  • Appendix A - Standardization and Comparison Between Groups 61
  • Appendix B - Analysis Tables 69
  • Appendix C - Parameter Estimates 85
  • Bibliography 107
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