Sure, it’s easy to argue for the importance of spending on science by pointing out that many of today’s most useful technologies had their origins in government-funded R&D. The internet, CRISPR, GPS—the list goes on and on. All true. But this argument ignores all the technologies that received millions in government funding and haven’t gone anywhere—at least not yet. We still don’t have DNA computers or molecular electronics. Never mind the favorite examples cited by contrarian politicians of seemingly silly or frivolous science projects (think shrimp on treadmills).
While cherry-picking success stories help illustrate the glories of innovation and the role of science in creating technologies that have changed our lives, it provides little guidance for how much we should spend in the future—and where the money should go.
A far more useful approach to quantifying the value of R&D is to look at its return on investment (ROI). A favorite metric for stock pickers and PowerPoint-wielding venture capitalists, ROI weighs benefits versus costs. If applied broadly to the nation’s R&D funding, the same kind of thinking could help account for both the big wins and all the money spent on research that never got out of the lab.
The problem is that it’s notoriously difficult to calculate returns for science funding—the payoffs can take years to appear and often take a circuitous route, so the eventual rewards are distant from the original funding. (Who could have predicted Uber as an outcome of GPS? For that matter, who could have predicted that the invention of ultra-precise atomic clocks in the late 1940s and 1950s would eventually make GPS possible?) And forget trying to track the costs of countless failures or apparent dead ends.
But in several recent papers, economists have approached the problem in clever new ways, and though they ask slightly different questions, their conclusions share a bottom line: R&D is, in fact, one of the better long-term investments that the government can make.
This story is part of MIT Technology Review’s "America Undone” series, examining how the foundations of US success in science and innovation are currently under threat. You can read the rest here.
That might not seem very surprising. We’ve long thought that innovation and scientific advances are key to our prosperity. But the new studies provide much-needed details, supplying systematic and rigorous evidence for the impact that R&D funding, including public investment in basic science, has on overall economic growth.
And the magnitude of the benefits is surprising.