More on Science Policy

This is a guest contribution from Luke O’Neill, in response to some of the criticisms levelled at his original Irish Times piece.  Thanks to Luke for submitting the comment:

Good to see the debate on Science funding in Ireland proceeds apace. 2 things- first I’m always surprised at being accused of having a vested interest. Of course I have a vested interest having been at this profession for 25 years and really believing in scientific research as an extremely important activity that should in part be funded by governments. Doesn’t everyone have a vested interest of some sort?

The second thing I get accused of is of not providing enough facts. Well there are so many facts out there when trying to measure ROI and its been going on for years and years with no absolute answer. The one conclusion that most countries draw is that it is a good thing for governments to support basic research. I guess in Ireland since the budget is tight the question is can we afford it or not? If we decide that we can’t afford it I think this would be very negative indeed but obviously many think it would not be negative, although what they want instead is not necessarily spelt out. The question then arises as to where a govt should put its money regarding science and technology. What would be good would be for there to be a debate on this and to compare the alternatives with agreed metrics.

Now as to the facts what follows is a series of pieces trying to establish these. I didn’t put many of these in the Irish Times piece I did because I wanted to keep the piece to a certain length and emphasise not only the economic benefits, important though they are.

The ROI ranges from as low as 10% to 40 fold and the whole problem is the assumptions being made when trying to establish the facts. So we can pluck whichever ones suit us, both to support our particular argument or use against another person’s view. Of course we could conclude that because there is no accurate measure, funding should not be given…but that might be viewed as being, dare I say it…crass. Anyway I would appreciate your opinion on each of the articles below. I can provide as many facts as are needed. I also finish with my non-economist’s view of why it’s important for governnments to support basic research.

1. First the 3 to 1 return is normally attributed to return on education (including educating PhD students) rather than research per se

2. On research this is an analysis of investment in Health research – which is narrower in focus ( just health) but broader in context ( not just basic research) – it estimates anything from 1.5 to 20X
( the US Murphy KM, Topel RH. The economic value of medical research. Chicago (IL): University of Chicago; 1999. Available:

3. This is a good balanced book on the topic: McClellan M, Heidenrich P. Biomedical research and then some: the causes of
technological change for heart disease. In: Murphey KM, Topel RH, edi ors. Measuring
the gains from economic research: an economic approach. Chicago (Il):
University of Chicago Press; 2003. p. 163-205.)

A comment from this book: “American investments in science and engineering have driven most of the innovations that underpin our economy today. A wide variety of studies conclude that between 50 and 85 percent of the growth of the U.S. economy over the past half-century-and two-thirds of our productivity gains in recent decades-are directly attributable to scientific and technological advances.”


Some good analysis but no numbers on this one – makes the comment that it is too difficult to measure across all parameters

5. A 40:1 return attributed to MIT is actually a quote from Hockfield and it refers to return in energy R&D across the board irrespective of institution – not exclusive to MIT just quoted by their president at the Whitehouse with the other president.

6. Another good balanced account which does make the point that for smaller countries investing in basic research can be risky – we must however see Ireland as being in a global context (eg most of the investment into Opsona is from outside Ireland).

Return on Investment in Innovation: Implications for Institutions and
National Agencies*
Author: Heher, A.1
Source: The Journal of Technology Transfer, Volume 31, Number 4, July 2006 ,
pp. 403-414(12)
Publisher: Springer

From the Abstract:
Commercial success in universities in the USA and Canada has resulted in
many other countries taking steps to emulate this performance and major
technology transfer and commercialisation support programmes have been
launched in UK, Europe, Australia, Japan and many other countries‹including
South Africa. Unrealistic expectations have, however, been generated by the
spectacular successes of a relatively few institutions and it is not always
realised that the success from commercialisation is proportional to the
magnitude of the investment in research. Without a well funded, high quality
research system, it is not possible for technology transfer to make any
significant contribution to economic development. The possible economic
returns to higher education institutions from commercialisation of research
can be estimated using international benchmarks. This forecast uses a
combination of an institutional return on investment model and a simple
economic projection. The model is generic and can be adapted for use in any
institution. As more data becomes available from local (and international)
sources, the model will be refined to give better estimates. The model is
dynamic and shows, quantitatively, why it can take up to 10 years for an
institution, and 20 years nationally, to attain a positive rate of return
from an investment in research and technology transfer. The model enables
the long-term impact of policy decisions, in an institution and nationally,
to be examined and alternative scenarios explored. The performance of
individual institutions is, however, highly variable and unpredictable. This
is even for those institutions that are comparable in size and maturity. A
large portfolio of patents and licences is required to give a reasonable
probability of positive returns. This may be possible at a national level,
but is problematic in smaller institutions‹and smaller countries. Because
the benefits of the innovation system are captured largely at national
level, with institutions having a high uncertainty, public sector support to
reduce the institutional risk is necessary to assist institutions to make
the necessary investments. Technology transfer is of course only one element
of the overall research and innovation value chain. All elements must be
functioning effectively to derive the economic and social benefits from
research. In addition to a strong research system, adequate incentives must
exist to encourage academics to participate, particularly with regard to the
crucial initial step of invention disclosure. After disclosure, sufficient
institutional capacity must be in place to take an idea, evaluate it,
protect the intellectual property appropriately and then seek a path to
commercialisation through either licensing or start-up company formation.

7. Another good article:
What does society get for the billions it spends on science?

By Kerry Grens

Double research funding? Be careful

In 1930, the US Congress gave a group of scientists and administrators
$750,000 to start a new agency, the National Institute of Health. Over time,
“Institute” became “Institutes,” and appropriations grew. In 1938, the NIH
received $464,000 for research – roughly equivalent to $6.8 billion in
today’s dollars. This year, NIH will spend approximately $29 billion on
research. The National Science Foundation, founded in 1950, will spend
another $6 billion.

Each year, appropriations are passed around before ending up at a final
figure. For the 2006 NIH budget, the Federation of American Societies for
Experimental Biology (FASEB) requested $30.07 billion. President George Bush
requested $28.8 billion, the House approved $28.5 billion, while the Senate
wanted to appropriate $29.4 billion. Ultimately, NIH received $28.6 billion.

What formula directs such tweaking? With hundreds of billions of dollars at
their disposal for discretionary spending, and numerous other projects to
fund – including education and healthcare – how do presidents, lawmakers,
and their staff settle on what goes where?

For a recent example, I looked to the California Institute for Regenerative
Medicine, now run by Robert Klein, chair of CIRM’s Independent Citizens’
Oversight Committee. Several years ago, Klein was facing a big task:
Identify a figure that California voters would agree to pay for stem cell
research. Rather than start from scratch, Klein looked to the NIH. In 2003,
NIH was spending $220 million on stem cell research. Adjust for inflation,
stretch it out over 10 years, and you get $3 billion, a figure that 59% of
California voters approved.

NIH has some economic evidence to support what it does. In 2000, a report on
the benefits of NIH research by the Joint Economic Commission of the US
Congress found high economic returns from investing in research. In other
words, besides the obvious health benefits of NIH funding for biomedical
research, it also saves Americans money by lengthening their lifespan and
improving healthcare. In their meta-analysis of a number of economic
studies, the authors concluded that if even a minor fraction of the
healthcare savings from healthier, longer-living people were due to medical
research, the payoffs from that research would be many times the initial

Klein used the findings of this report to make a good case that taxpayers
would get something significant back from their investment, arguing that,
overall, federally-funded biomedical research pays back to the economy to a
considerable degree. This is another reason Klein chose to imitate NIH –
what the institutes spend is working. To gain voters’ approval, “it was
important to have a responsible economic plan that had been shown on a
portfolio basis to have some results,”

Klein says. The “Yes on 71″ campaign (based on CIRM’s proposal, called
Proposition 71) helped deliver the message to voters.

Initially, at least, some say the gamble California citizens agreed to take
will pay off. An economic impact report conducted by Bruce Deal at the
Analysis Group and Laurence Baker at Stanford University found that
Californians could expect returns of at least 120% to 236% on their
investment in stem cell research over thirty years. At the high end, if
Proposition 71 leads to “major advances in health care treatments,” the
authors say the state could get back more than seven times the cost of the

If we get so much back from biomedical research, why not invest $30 billion?
$300 billion? Certainly there are limitations on how many dollars are
available to invest, as well as competing investments such as Medicaid and
education (on the state level), and the war in Iraq (on the national level).
But if science’s returns are so economically robust, why don’t we put more
into it?

“The issue is, are we underinvesting or overinvesting in life sciences
-Pierre Azoulay
Twenty-eight percent. This is the figure Edwin Mansfield, a now-deceased
economics professor at the University of Pennsylvania, obtained after
wrestling with an army of assumptions to pinpoint a likely return on
research payoffs.1 In 1991, Mansfield estimated that the rate of return on
investing in academic research (across all disciplines) was 28%, meaning
each dollar put into research would yield $1.28 in social and economic
benefits within about a decade.

As part of the study, Mansfield estimated that 27% of drug industry products
would not have been developed, except with significant delay, had academic
research been eliminated from the pipeline. James Adams, an economist at
Rensselaer Polytechnic Institute in Troy, NY, has been able to pick apart
some of the relationship between academic research and industrial
innovation. He surveyed the research and development laboratories of 200
companies to measure the amount they invest in learning about research at
universities, such as attending conferences, hiring and meeting with
consultants, and purchasing publications. On average, companies spent about
six percent of their research and development budgets on learning efforts,
and with each 10% rise in federal funding at universities, the learning
budget at companies rose by more than one percent.2

“What happens next is we found the learning share [of R&D budgets] to be
positively correlated with more patents,” Adams says. So when the federal
investment in university research increases, companies spend more money on
learning about academic research, and companies produce more patents, an
indicator of future economic impact. “There’s no question that [research] is
an incredibly large contributor to all advanced countries’ economies,” Adam

Other groups agree. Looking at a group of 16 developed countries, Dominique
Guellec and Bruno van Pottelsberghe de la Potterie (former and current chief
economists, respectively, at the European Patent Office) found that when
publicly funded research at universities and government laboratories
increased by one percent, countries experienced a 0.17% increase in
productivity, measured as the ratio of industry’s domestic product to labor
and capital.3

Economists have also found that medical research can, not surprisingly, have
an enormous impact on human health, especially longevity. Kevin Murphy and
Robert Topel at the University of Chicago found that, from 1970 to 1990, the
economy earned $1.5 trillion each year solely from reductions in heart
disease death rates. “These values are truly enormous,” the authors write.
Though such changes could be due to improvements in public health or
lifestyle, “if even a small fraction of this improvement is due to medical
research, the economic return to that research could be substantial.”4

Often the relationship between science and savings is hard to tease apart. A
2003 study by the Europe-headquartered Organization for Economic Cooperation
and Development found that private R&D appears to have “high social
returns,” which includes economic benefits, but noted no clear-cut
relationship between publicly funded research and economic growth.5

Joe Cortright, an economist and vice president of Impresa, an analysis
company in Portland, Ore., has found that the benefits of federal academic
funding on biotechnology vary by region (see “The biotech contrarian.”) For
example, Johns Hopkins University receives the most federal money, but is
“not a particularly good performer in terms of commercialization,” says
Cortright. Likewise, Chicago, St. Louis, Houston, and Detroit are leading
research centers with little to show in terms of bringing their work out of
academia and into biotechnology companies.

Mansfield considered his estimate tentative and loaded with caveats, but
still conservative. For example, he looked at the impact of academic
research on only seven industries, and only as far out as 15 years. “Of
course, the roughness of this figure should be emphasized,” Mansfield wrote.

For every estimate of the returns on scientific investment, there are many
reasons why that estimate could be wrong. Each economic study of the impact
of science carries its own assumptions and other potential confounders.
“These claims can always be demolished,” says Terence Kealey at the
University of Buckingham, often because they are loaded with assumptions
that greatly affect the figure. For instance, Mans-field’s 28% does not
account for the cost of development, marketing, or the cost of building
factories, some of which could lower his estimate of the return on science
funding. “He’s assumed in some magical way that scientists do their research
and produce the facts and these instantly become products,” Kealey notes.

“There are all kinds of methodology and measurement problems,” agrees Iain
Cockburn at Boston University. Congress’ 2000 economic impact report on NIH,
for example, assumes the agency is responsible for about 10% of health
advances in the United States. “The question of what’s the rate of return to
NIH budget is fundamentally a very difficult one,” Cockburn says.

8. Interesting comparision between Europe and the US:
Study: Europeans beat Yanks at the R&D game
By John Carroll Comment | Forward
If you asked just about any biopharma exec on this side of the Atlantic if U.S. developers are more productive than their European colleagues, chances are you’d get a good laugh. Everybody knows that the Yanks are more productive than the Europeans, right?

A new study, though, might have you rethinking that bit of common wisdom. Stanford Professor Donald Light decided to take a second look at the data in a 2006 Health Affairs report which concludes that the U.S. developers did indeed bring more first-in-class drugs to market in the 21 years leading to 2003. Light found that if you looked at productivity based on R&D dollars spent, though, the Europeans actually come out ahead. The most productive based on R&D investments: The Japanese.

“It would appear that American research provides poorer value,” Light concludes in a Wall Street Journal piece. U.S. research productivity has been “low and flat in proportion to the large company investments in R&D, while the number of major new drugs credited to Europe is high and increasing in proportion to company investments. Why is American research performance not better?”

– read the story in the Wall Street Journal

Related Articles:
Money, money, money and medical innovation
Expert forecasts revolution in drug dev. work
Biotech’s value creation chain starts with research link
Deloitte sees ‘fundamental shift’ in drug dev. Strategies

Now from all the above you can pick and chose whichever facts you want depending on your own vested interest.

What I would say is this:

Let’s say a government invests $1m in research:

1. Universities spend a significant percentage on salaries in skilled labour
market, employees pay income tax and consumption related taxes and use local
services/purchase goods locally. It could therefore be argued that majority of
money recycles locally. (the direct economic value of a University to a
city should be measurable)

2. In many areas eg bioscience, engineering, physical sciences IT etc
research is co-funded by EU or Commercial sector, adding to the tax and
consumption returns above.

3. The percentage of research that enters development attracts more
commercial investment and creates new jobs.

4. Successful commercialisation leads to profits and more jobs and tax

5. In some sectors the products and skills developed have indirect economic
benefits eg health care- countries/regions/cities that research and develop
new treatments have a more skilled medical profession = better outcomes for
patients; and earlier access to improved treatments = better outcomes and
reduced disease burden on society.

6. Successful/trained/experienced people can be recycled to make the circle
of life more efficient.

Why government is essential to this process is that without it the large
volume of highly risky/speculative early research would not attract
investment, leading to vastly reduced choice at stage 2 and beyond and as
success in 3,4 and 5 is related to number of projects and availability of need govt to prime the process.

Bottom line is do we want Ireland to slip back to the times when our
creativity was restricted to the arts, financial engineering and emigration, or do we want a country that keeps
its scholarly heritage AND stimulates creative activity in emerging
scientific, technical, medical, cultural and commercial areas…

Answers on a postcard please…

Now back to my day job.


28 replies on “More on Science Policy”

The first study is looking at the wrong parameter. There is a huge literature on estimating the returns to education . How much extra tax is paid by the more educated does not provide a basis for evaluating education investments. An investment could be very worthwhile but yield little or no tax revenue.
These studies focus,almost always, on the private financial return: how much does my education increase my income, the so-called “Mincer model”. Of course there are other benefits: private non-financial (my education affects my health) or externalities (my education affects your health). Good evidence of these externalities is quite difficult to find though they are widely believed to exist.
A typical estimate of the private rate of return to one year of education is around 7% but it varies a lot across country & demographics. I don’t know specifically about estimated returns to PhD’s.

Hi Luke,

on point 3, I am having a hard time locating that quotation in google books. Can you point me to the right page? I would like to know what studies are being referred to, and in particular if they are based on the Solow residual/TFP methodology that as economists we are all familiar with.

“Bottom line is do we want Ireland to slip back to the times when our
creativity was restricted to the arts, financial engineering and emigration, or do we want a country that keeps
its scholarly heritage AND stimulates creative activity in emerging
scientific, technical, medical, cultural and commercial areas…”

Wouldnt the bottom line be, what can we achieve at what price?
Allow me to ignore the achievement side?
The price can be broken down further:

Capital costs
Administrative costs
Heating and lighting etc.

At what percentile cost does research/researching actually occur?
Is this the same thru out the country?

I dont think that I disagree with your aspirations, but there needs to be Bord Snip style discipline in the process.


Its very interesting that Murphy and Topel is brought in here by Luke Kelly. A student (Mark McGovern) and I are working on this for Ireland. While it is clear that the life expectancy gains over the last fifteen years are massive, the real question of interest is how much they can be attributed to basic medical research conducted in Ireland. Of course, the answer to this has to be far less than would be the case in the US. However, the extent to which life expectancy increases are due to integrating global technologies is another question and we should give some thought to Richard Tol’s point that having top class scientists in Ireland also makes it more likely that they will teach the frontier technologies and methods to their students. We simply have not got enough knowledge to work out the extent to which this operates in Irish medical research but it is not something that should be dismissed.

I think looking at PhD education from a traditional returns to education approach will not provide a strong rationale for large scale public funding. More interesting will be to examine whether a growing number of PhD graduates will actually facilitate the development and/or integration of the types of enterprises that require employees with PhD level research skills.

If ever an edit function was more needed!! – my apologies to both Luke O’Neill and the late Luke Kelly. I attribute this error to the nine books about old Dublin currently on my desk!

Thanks for an interesting post, Luke. This is a really important issue to address.

@ Kevin Denny
Indeed a good point – private returns to education as a reason for govt investment is a bad start. The high private returns and hard to pin down social returns are exactly why there is a push for a return to fees at higher education. There is a debate on whether these returns to education reflect greater productivity – a point the Australian University sector has started to push. I mentioned this on the thread relating to Richard Tol’s post on the innovation task force submission – Andrew Leigh (ANU) discusses this report at

@ Kevin O’Rourke

The quote is the one used in a number of discussions on this topic (most recently by Patrick Cunningham in the Irish Times). As per the thread on that topic, it seems that the direct source of the comment is John Holdren, Obama’s Presidential Science Adviser (in his Testimony to Congressional Committee, February 2009) which Luke links to. This in turn appears to be inspired by a paper by Dale Jorgensen in a recent Journal of Economic Perspectives (A Retrospective Look at the U.S. Productivity Growth Resurgence: Jorgenson, Dale W.; Ho, Mun S.; Stiroh, Kevin J.; Journal of Economic Perspectives, Winter 2008, v. 22, iss. 1, pp. 3-24). So, Kevin, yes it is the Solow/TFP story but In reading the Jorgenson paper it is hard to tell where the story on the impact of research on productivity comes from and certainly where the 50% to 85% calculations are derived from. Someone might ask him – its proving to be a very influential story!!

@ Liam

I am a big fan of the Murphy/Topel work and of Mark/Liams work on Ireland but agree that the medical research evidence is a mixed blessing in terms of providing evidence for the core point. The recent research in health economics is also starting to point to an offset to the gains the Murphy/Topel calculated. For example, the longevity gains or gains from better treatments for cancer etc are now being offset by the increased costs of treatment of these folks in old age. I know this is a bit of a dismal scientist issue – you keep them alive longer but they just become more costly to treat in old age!

@Colm H/Kevin O’Rourke

Colm, I’ve looked into the Dale Jorgensen (JEP) paper, which also to my knowledge, is the source material for the Holdren quote to Congressional Committee, that “between 50 and 85 percent of the growth of the U.S. economy over the past half-century –and two-thirds of our productivity gains in recent decades –are directly attributable to scientific and technological

It turns out that the Jorgenson et al. paper covers the period: 1959-2006. The central part is really Table 1 on page 13, which presents the growth of output. Following the paper’s terminology (from the top of page 8), the focus is on “total factor productivity” – defined as output per unit of both capital and labor inputs – and which “primarily reflects innovations in both products and processes” – or more simply, innovation. Total factor productivity (TFP), contribution of labour quality and contribution of capital deepening all feed into average labour productivity – which (along with hours worked) feeds into private output. So TFP as a percentage of private output (from 1959-2006) is 0.75/3.58, which is almost 21%.

Even if we consider TFP as part of average labour productivity, which (from 1959-2006) is 0.75/2.14, this is still only 35%. The other possibility I thought of is that Holdren’s figure is coming from a calculation which is average labour productivity divided by private output. This (from 1959-2006) is 2.14/3.58, which is 60% – somewhere between 50 and 85. Experimentation with this ratio in Table 1’s additional columns (over the sub-group timeframes) led me to believe that this is where Holdren’s figure is coming from.

Going back to the definitions on page 8, we know that capital deepening is defined as “the increase in capital services per hour worked and captures the fact that workers become more productive if they have more and better capital with which to work”. Labor quality is defined as “labor input per hour worked and reflects changes in the composition of the workforce.” It is possible that Goldren is emphasising the importance of higher education for the latter (labor quality) but I am unsure about what Goldren is thinking with regard to the former (capital deepening). My understanding is that technology does play a role in capital deepening, so this may be what Goldren has in mind.

Finally, it is worth flagging the comparability issues – that Ireland is a much smaller country than the USA (and a SOE).

Actually Colm the point I was making was more basic, the paper cited by Mike Hout (a very good sociologist) was about fiscal returns not private returns: how government revenues are boosted by education rather than GNP.

If it is the case that it is TFP growth that is being referred to as being due to science, technology blah blah then I guess we, economists, only have ourselves to blame since we tend to refer to it as technological progress. It sounds better than the “residual”. Of course it could be lots of things, improved work practices for example.

It would also be good if you could think further about the benefits from medical research that is used in a non-market sense through public hospitals and general public health improvements. For example, we are trying to put valuations on the benefits of factors that reduced infant mortality in the 1940s. Pinning down the precise causality is tricky given the historical data available but even it you included a wide range of potential inputs, the benefits were likely still very high in comparison to the cost given the massive change in infant mortality and early conditions. It would also be very interesting to examine further the health implications of developments in stroke, lung disease, heart failure, diabetes and cancer treatments in Ireland. The real question is the extent to which funding basic research in Ireland improves these outcomes.

None of the papers you cite can really address these questions as they are largely focused on the US, which does materially influence the global technology stock in a way Ireland doesn’t. However, having Irish researchers conducting rigorous and innovative trials as part of global consortia seems to marry the best of both worlds and it doesn’t come across in the debate yet that many Irish medical projects are of this type. I am generally convinced that many major medical advances will come in Ireland from medical researchers who are taking part in the Irish round of major global research projects. Being involved in these types of projects provides Irish hospitals with access to global expertise and also provides global research with access to Ireland as a data-point. The debate on this blog so far has not sufficiently examined the placing of Irish research in these large scale international contexts.

@ Martin, Kevin O’R
Crossposting – so Martin got there before me. In an evening of typos, Martin, Holdren turns into Goldren in error but thanks for this. We might flesh this out sometime (although I suspect Kevin or others will take the Jorgensen paper and strip it out for us much more easily than I can!).

@ Kevin D
Ah, thanks. Will have a look at the Hout paper (indeed a very good sociologist – his work on the Irish migrants is fantastic). I guess my point also stands too. I agree also that the TFP story is somewhat of a cop-out but I don’t know the growth literature well enough in terms of how it has evolved to treat this in a more refined way.

A later and even stronger statement from Murphy and Topel is below. In this paper they argue strongly against the idea that basic medical research is reaching diminishing returns with respect to the potential amount of healthy life that can be saved. Again, this is largely based on the US. If this type of case is going to be made in Ireland, it needs to be on different terms. We certainly cannot rule out that some aspect of the process of funding medical research in Ireland will lead to the types of gains described by Murphy and Topel but it wont come from the same channel they are describing.

@Murpy and Topel
Their book is here:

They get their valuations all wrong. They use the individual, marginal value of a reduced risk of premature death; and scale this up to the social value of a non-marginal change. This is a gross overestimate of the value of medical research.

It is also quite wrong to ascribe all increases in longevity to basic research. Improvements in hygiene, exercise, diet, and road and occupational safety also helped.

Richard – will be presenting findings on this soon. For Ireland, it is very difficult to ascribe the gains in the 1940s to basic medical research. The gains from 1986 on are a different question as they are largely focused on reductions in old-age mortality, particularly heart disease. The MT story is less fanciful for here but still would need to be substantially modified for Ireland.

If mortality falls but morbidity does not, then that is probably because you keep sick people going for longer.

Anyway, I stick to my point that basic health care has contributed a great deal to improved health; and that this should be ascribed to epidemiological research and health education rather than to advances in medical research. As regards treatment, the human capital of medical staff has improved and there has been considerable process innovation in health care. All of this confounds the impact of better pills.

Re-reading the original post

Mansfield: 28% in a decade is a return of 2.5% per year

Deal: 120-236% in 30 years is a return of 0.6-2.9% per year

You’d rather put your money in a savings account.

Actually this illustrates the absurdity of trying to segregate “basic” from “applied” science. In the case of smoking – the basic science of statistics delivered randomized trials that could be applied to smoking to show that it caused harm by Doll ( a triallist, not an epidemiologist). However, basic science is/has delivered insights in the mechanism of how ( relevant to all those nicotine gum chewers) and why (variants of suceptability genes relevant to both addiction and protection) smoking conveys risk of cardiovascular disease. in the case of aspirin and statins, basic science provided the insights that made it worthwhile to develop them for heart disease and actually to explain why the early trials did not work. Same goes for drugs that control blood pressure. In the case of exercise basic studies of physiology long anteceded epidemiological suggestions of benefit. The list goes on. Put it all together and you get a ~50% decline in death from heart attacks over the period during which these insights were developed. So it is impossible to tease apart the contributions of basic science from applied science and to try to caluclate their relative contribution to an output like the health of a nation- in this case a reduction in heart attacks. Contributions to these insights came along the eay from many countries – even from scientists in Ireland!

One unmeasured advantage of investment in science in Ireland is that it educates physicans ( and others!) in the critical assesment pertinent to scientific method which they then convey to practice. Not long ago a prominent surgeon/columnist and sometime consultant for dairy interests would widely proclaim the nonsense of lowering lay and medical audiences. What is the economic value to Irish health of having the education to debunk that theory?

Actually I thought Doll was an epidemiologist & a trialist and that his most influential work on smoking was the British doctors study: a view (or fallacy) shared by Wikepedia (sorry, it was the handiest reference I could find). RA Fisher, a smoker, didn’t like the study claiming it was just confounding.

Anyway the point that pure & applied research interact is well taken. But I don’t think its absurd to segregate them, its just very very difficult. The point is that at the margin, governments or foundations have to make decisions about how to allocate funds to different types of research. So this means coming up with a view about their relative contribution to the public good, (however defined). So, if these decisions are not to be taken just by bureaucrats, the academic community has to find some way, however imperfect, of partialling out the different effects.

Of course there will always be unmeasured advantages to science, just as there always will be crackpots in the media!

Hoisting myself on my own petard – it’s as absurd to try and segregate Doll’s accomplishments ( nice guy; shared his fax machine) as an epidemiologist vs trialist as it is to segregate basic from applied science. The Doctors’ study was indeed longitudinal epidemiology but the unit Doll founded is all about trials. As an outsider, I’m actually quite impressed with where Irish biomedical science( don’t know anything about the rest) has got to; a few internationally competitive groups, a critical mass of young people in training, increasing visibility in the international community and the first whiffs of translation. For example, this compares well with Singapore (another small country that started at the same time) – with which I’m quite familiar. Small countries can achieve mature excellence in biomedical science – Switzerland, Holland, Denmark, Scotland and Sweden for example.
The question now is not whether you dismantle this nascent effort ( a 15% cut would accomplish that nicely) or consider whether you refine the strategy to go to the next level. SFI was based on NSF, not NIH but perhaps, although this was driven by the first director rather than refined cogitation, that wasn’t a bad idea. All applied research derives from basic discoveries ( shoulders of giants etc) , so that’s a good place to begin your investment. Secondly, applied biomedical research requires a fundamental reform of the anti- intellectual structures of Irish medicine; a tough nut to crack. However, maybe it is time for this to gather steam.
Reading these blogs it does occur to me that your community might really benefit from a workshop of economists and scientists to being to educate each other. The trick is not to look for meaningless short term readouts, but to integrate your metrics with ours and see how together they might frame realistic expectations.
All these Garret FitzGeralds must be confusing, but they serve as a nice metaphor for the need to integrate the approach to the problem accross our sciences!

While cutting science funding by 15% may have well have negative effects on research, there is very little low hanging fruit these days. The political economy is such that the aggregate reduction in spending will be easier to achieve if its broad based. My own view is that there is lots of wasteful expenditure in the education sector, some of it identified by McCarthy et al. We need to get on with reducing that if we are going to expect a beleaguered tax payer to cough up for basic or applied research of any kind.
The workshop is a good idea: scientists & economists largely live in different universes despite being on the same campuses.
The plurality of Garret FitzGeralds can indeed be confusing: like the 46A bus you wait ages for one and then… but I imagine most of us had worked out which you were!

@Garret FG
Research funding will be cut in the next few years. The question is how to place this burden disproportionally on the undeserving.

This debate is urgently needed as the next budget is approaching fast.

To date, the top of the research funding establishment has responded with a bland “everything we do is brilliant” and “every penny invested has a big return in jobs and growth” — rather than preparing for the inevitable cuts in research funding.

Having been at a few meetings leading to its inception, I have been amazed that SFI has relied on international peer review to allocate its resources; both encouraging and countercultural. I think strategic review of the distribution of resource in the research sector is appropriate, given the economy, and may well have occurred – I wouldn’t know.
If the headline outcome is that we are narrowing or shifting our focus and here are the reasons why, that sounds OK. However, if the headline issue is that we are decreasing investment by 15%, I am very concerned. Not so much for the local scientists ( although I really feel for them – with existing year on year commitments this really hits new projects asymmetrically – for that, read new investigators) but more for two external audiences. The obvious one – the people that make FDI decisions, already challenged by the cost of doing business and the still nascent stage of evolution of the science base, but also, frankly, people like me. Well, PLM without the emotional connection.
We matter not for the “stars” (?) who might move there for the property bargains and semi retirement, but rather as potential external collaborators who catalyze the development of Irish science ( all that peer review, placing meetings etc) and add real value to the efforts of Irish scientists by collaborating with them. This group have slowly begun to come on board. Frankly, they have been impressed by Government commitment to science in places like Ireland and Singapore and ( despite the lousey weather in both places ) have been keen to help. However, it doesn’t take long to destroy an international reputation; just ask GWB. Finally, the other message that this conveys is to the few local scientists who are indeed globall competitive – they are the most mobile , if they feel that the devotion to building science in Ireland has become unreliable.

@Garret FG
I share your concerns. But if you’re cutting welfare payments and frontline staff in children’s hospitals, you can’t really argue that research is so special that it cannot be cut too.

While you notice the excellent parts of Irish academia from afar, from up close one also sees a lot of rubbish. It should therefore be possible to cut research spending and improve average quality at the same time.

Reading the contributions above, how many of you have read the references provided by Luke to support his case?

I have read them and I believe they do not represent signifiacnt support for the economic significance of medical research in improving life expectancy.

Key variables in improving life expectancy are not rigorously accounted for. We all know that improved diet, not smoking and taking exercise (to name a few things) intuitively have a very significant effect on cardiovascular health and hence on life expectancy.

It is also true medical research has some effect but we do not know how much. There is also the serious issue that the researxh Luke relies on does not consider how the economic evaluation is invalidated by the large number of poor people who cannot avail of the outcomes of medical research. Just yesterday, we heard Barack Obama refer to 50 million americans who do not have health insurance.

How many of the contributors looked at the mathematical modeling used in the Murphy and Topel reference. That reference sets out a model of the economic value of health and life expectancy, that the authors apply to US data on overall and disease-specific mortality rates.

This is key to what the authors say. We should ask how meaningful the model assumptions are now giwen what we now know about financial markets and perhaps this merits a closer look.

For example, the assumption that “— perfect and complete annuity market, which means that at each age a the lifetime expected
discounted value of future consumption must equal expected lifetime wealth” is more than a little shaky in the modern economic reality.

I know the reference relates to a time period before this reality took hold, but the implications of what was said must be examined today.

To me, this emphasises the shaky and wooly basis on which much of the the economic justification for supporting basic research is grounded.

Again if we read what economists mean when they talk about “technological change” or “technological advance”, it is very clear that as non-technologists (or non-scientists) theyare able to allow themselves a significant descriptive licence in what they deem to be covered by these terms. They also use terms such as “science” and “technology” interchangeably.

For example, Mokyr includes “new and improved designs, better or more efficient ways of doing things” and so on.

It is very clear then that when economists attribute economic growth to either technological or scientific change we should realise that they are referring to a broad range of activities that comes under the heading of innovative activity. It is not just basic research.

And if we continue to believe that the numbers we see trotted out can be attribute to basic research, then why are only 2% of all patents based on pioneering solutions and why do 97% of patents fail to recover the cost of filing?

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