The Boys in Green boss is confident that playing games against stern opposition is the best way for his team to prime themselves ahead of the Euro 2016 qualifiers
Following their 2-1 loss against Turkey and scoreless draw against Italy at the end of May, the Boys in Green fell for the third consecutive month in the ranking, which was updated on Thursday, dropping four places to 70th.
Nevertheless, the former Celtic and Aston Villa boss is adamant that the difficult nature of the opposition is "the best preparation" for the forthcoming European Championship qualification matches, which commence in September.
"We've chosen pretty difficult games here," O'Neill told reporters ahead of his side's clash with Costa Rica.
"If we'd gone the other way, and if you gave me three or four teams we could have beaten, I'm not sure that would be the best preparation for the European Championship. Do I think this is the best preparation? Yes.
"It's funny how stats quickly mount up," continued the Ireland boss. "We're playing some friendly games. This conversation was going to come around at some stage or other because we haven't been able to win a game or two.
"But I think we should have won our last three games. I watched the Italy game back last night, and we should have won it."
Meanwhile, Robbie Keane has returned to the Ireland squad following a four-game hiatus and is set to feature against Costa Rica.
In Keane's absence, Shane Long has been deployed as a lone striker with Wes Hoolahan playing behind and O'Neill is certain that the Norwich City midfielder can play alongside the Ireland captain.
"Is there room for both players? Of course there is. There's always room for good players," O'Neill explained.
"I don't see Robbie and Wes being very similar players. I think Robbie would score umpteen more than Wes would score as that's the nature of it."
He added: "I don't see any great difficulty for the two of them working together.
"Whether Wes starts tomorrow, and he's done great for us in the two games, I wouldn't read much into that. In competitive games I don't see that (playing both) as a problem."