Abstract
An hypothetical, but typical, example of defence procurement is used to illustrate the problems in Government of balancing costs with the services they provide. Difficulties arise because most Government activities cannot be measured in money terms and balanced in a profit and loss account. Commercial techniques for policy appraisal, such as discounting, seem to have limited relevance to the problems of managing departmental budgets where there is no recourse to a banker. A mathematical programme is used to solve the hypothetical problem and demonstrate that simplistic comparisons of the costs and utilities for various policy options yield little information. Good choices can be found, but are not always obvious ones. They are heavily dependent upon the richness of the problem context. Finally, the authors wonder to what extent the problems they ascribe to Government are also faced from time to time by Industry.
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