On a Quantitative Definition of Affordability

Report Number: NPS-AM-11-C8P24R03-079

Series: Acquisition Management

Category: Affordability

Report Series: Proceedings Paper

Authors: Charles LaCivita, Kent Wall

Title: On a Quantitative Definition of Affordability

Published: 2011-04-01

Sponsored By: Acquisition Research Program

Status: Published--Unlimited Distribution

Research Type: Other Research Faculty

Full Text URL: http://acquisitionresearch.net/files/FY2011/NPS-AM-11-C8P24R03-079.pdf

Keywords: Affordability, Utility Maximization, Effectiveness, Affordability Index

Abstract:

This paper introduces a definition of affordability based on the microeconomic theory of the consumer. We replace utility maximization with effectiveness maximization and discuss our conceptualization in terms of a cost-effectiveness framework. We convert our original ideas into a more useful degree (amount) of affordability (i.e., we ask not