Are ballistae effective in defending cities in Age of Wonders I?
Solution 1:
Ballistae are better at protecting cities, especially against higher tier creatures.
Archery has an Attack 4, while Shoot Javelin has 5, that's already a nice boost to the hit chance, especially against creatures with high Defence.
The ballistae higher range (12) allows it to attack 2-3 times before the enemy is upon them. Archers with their range of 8 only get 1-2 before being overwhelmed.
Without Marksmanship skill, a javelin deals up to 5 dmg, while an archery hit deals only 2. Even a single Shoot Javelin hit can already deal significant damage to most creatures compared to Archery, but Archery is also less likely to hit all of its attacks.
Against lower-tier attackers, archers and ballistae both do a good job, but even here 2 ballistae will handle things quicker than three archers. Against a heavy attack force, you are much more likely to inflict noticeable damage using ballistae, as archers will barely hit anything, and if they do, they only tickle.
Solution 2:
Disclamer : It was a long time ago I played the first Age of Wonder. I might confuse it with the 2 (or the 3), but on the other hand, I don't remember noticing a different gameplay between 1 and 2.
One big specificity of Age of wonder is the limited amount of slots in your army.
In HoMM, you can stack 1000 peasant against a dragon, If your peasants attack first, you will win.
In AoW, you can't. You have 8 (or 6) slot by army, one army on an hex. I don't remember if multiple army battle were a thing in the first one, but even if was the case, while defending, only 2 or 3 army will be used.
That's why there is diminishing return in term of costs.
At the start of the game, when resources are critical, and filling all slots difficult, low tier unit will be better, more cost effective, and losing an unit will have less impact.
But the moment all the slots are filled, the only way to 'upgrade' your army, is to replace low tier unit with better ones. You need the best unit you can afford. It does not matter if it is not cost efficient. You only worry about the DPS.