Budget allocation formulas: magic or illusion?

Abstract

Purpose

Budget allocation formulas claim objectivity, and hence fairness. But factors composing the formula are limited to supply, demand, and cost. Attempts to correct for this imbalance of empirical data like usage have led to the use of weighted values in the formulas. This paper seeks to argue that assigning “weight” in a formula introduces value judgments and subjectivity, leaving only the misplaced illusion of objectivity.

Design/methodology/approach

The paper surveys the published literature on the use of monograph budget allocation formulas and provides analysis to highlight the underlying problems of allocation formulas.

Findings

Over the past several decades numerous permutations of the monograph allocation formula have been proposed and published. But there is no magic in formulas once value judgments are introduced. Instead, one is only left with the appearance of objectivity.

Originality/value

This paper is a review of the philosophical and economic underpinnings in the library literature on allocation formulas and subsequent budget distribution. It seeks to demonstrate the subjective nature of these formulas, once they are separated from empirical data. The paper seeks to demonstrate the dangerous illusion of objectivity that formulas can create when implemented.

Citation

Cross, R.L. (2011), "Budget allocation formulas: magic or illusion?", The Bottom Line, Vol. 24 No. 1, pp. 63-67. https://doi.org/10.1108/08880451111142114