An early specialized work in the field is the RAND Corporation report The Economics of Defense in the Nuclear Age by Charles J. Hitch and Roland McKean ([2] 1960, also published as a book [3]).
[4] A major step forward can be then accredited to Charles J. Hitch and Roland McKean and their work The Economics of Defense in the Nuclear Age from 1960.
[5] However, importance of the field grew especially in the late 1980s and early 1990s due to political instability caused by the breakup of the Soviet Union and liberation of Eastern Europe.
[6] This resulted in the publication of a complex overview of the current state of the field in 1995 from Todd Sandler and Keith Hartley called The Handbook of Defense Economics.
For example, the first written set of laws called the Code of Hammurabi from the 18th century BC can be considered one of the earliest works dealing with problems and questions of the economics of defense.
[2] During the Cold War, the main topics included superpower arms races, establishment of strong and lasting alliances and nuclear weapon research.
[11] These consist of finding the optimal choice between alternative logistic arrangements, rifles, specialized equipment, contract provisions, base locations and so on.
[11] An absence of a widely accepted tool to calculate the change in value when choosing among various options represents a major difficulty in the economics of defense because it makes the identification of the optimal allocation practically impossible.
[10] This area also studies critical infrastructures such as road, rail, water, health, electricity, and cybersecurity networks, to improve their resilience against intentional attacks.
The government acts as a rational agent, trying to maximise the welfare of society by taking into account the security benefits, the opportunity costs and the trade-off between military and civil spending.
[17] At the Prague Summit 2002, with the 9/11 terror attack not in the distant past and the enlargement of NATO into Eastern Europe (Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia), member states agreed the need to strengthen the alliance's ability to deal with a wide range of new threats.
The previous president Barack Obama was concerned that not all NATO members are "chipping in" toward the cost of a collective defense and deterrent against Russia at the time of Ukrainian Russian conflict.