Verification of the Japanese Government’s Level of Utility with Respect to Defense: Creation and Measurement of an MAI-I Model

Abstract

In Japan very little empirical security research has been conducted using economic theory. This is because the utility maximization and profit maximization on which economic theory is based are considered to be difficult to apply to security research. The authors have created a model for utilizing economic theory, which so far has been difficult to apply to the economic analysis of security, which they call the MAI-I model.

This model has the following features.

First, when performing analysis using utility functions, it uses government utility functions and assumes the use of cardinal utility which can accurately measure utility levels. The utility function in this paper, therefore, makes it possible to accurately measure the utility level of past Cabinets with respect to defense.

Second, in order to accurately measure utility the precision of utility functions must be increased. In economic theory, for the purpose of greater measurement convenience, utility functions are assumed to be 1st-order homogenous functions. This paper does not make that assumption. Instead, it assumes the function is a μ-order homogenous function and creates a model for use in cardinal utility measurement. The utility function includes μ in its power, but measurement was made possible by using it as an MAI-I model.

This produced the following results.

First, it was possible to measure the μ value of the μ-order homogenous function, necessary to measure the utility level of the Japanese government with regard to defense. It was found that the function was a 1.1079-order homogenous function. This indicated that the Japanese government has, for a long time, implemented security policy with a defense expenditure budget of less than 1% of the GDP, and restrained their utility even though it will largely grow if they will increase defense equipments and personnels.

Second, this utility function could then be used to calculate the government's cardinal utility. This cardinal utility was said to be impossible to measure accurately, but assuming the function is a μ-order homogenous function, it was possible to utilize Japanese defense data to perform measurement. In other words, for the Cabinets which actually focused on security policy, the policies were reflected in actual utility level measurements, indicating that the MAI-I model created in this paper can be used for economic analysis of security. The ability to use the utility functions of this paper to accurately measure utility levels of past Cabinets with regard to defense is a successful quantification of Japan's defense history.

Last, the paper indicated future potential for use of the model in analyzing utility from a variety of perspectives.