Public Goods, Public Gains: Calculating the Social Benefits of Public R&D

by Albert N. Link

In Public Goods, Public Gains, Link and Scott discuss the systematic application of alternative evaluation methods to estimate the social benefits of publicly financed research and development (R&D). The authors argue that economic theory should be the guiding criterion for any method of program evaluation because it focuses attention on the value and the opportunity costs of the program. The evaluation methods discussed and illustrated are both economics and, for comparison, non-economics based.

The book is motivated by four foundation chapters that discuss government's role in innovation from the perspective of economic theory, review public accountability issues from both a constitutional and an historical perspective, overview systematic approaches to program evaluation, and describe the evaluation metrics typically used. Four case studies illustrate the four alternative evaluation approaches discussed. These case studies are for the U.S. Advanced Technology Program's intramural research awards program, the U.S. National Institute of Standards and Technology's research on wavelength references for optical fiber communications, the U.S. Malcolm Baldrige National Quality Award, and the Advanced Technology Program's focused program on the integration of manufacturing applications.

176 pages, Hardcover

First published December 30, 2010

Reviews

[Tyler]

This is a thin but dense economics book which first tries to propose some methods of calculating the benefits of public spending on research and development and then lists some case studies highlighting the benefits to industry and society which can come from this kind of spending. The authors convincingly argue that many times some research endeavors are underfunded (especially basic research) because the benefits to firms conducting that kind of research are too small to warrant necessary investments. However, oftentimes there are "spillover" benefits from public research which positively impact all participants in an economy. Some graphs are provided to illustrate this case.

To me, this book is falling short for two reasons. FIrst, the authors seem to be arguing that net benefits for the research projects in question outweighed the costs to taxpayers. However, it's hard to tell whether some of these investments were worth more than other investments which could have been made by the public (such as investments in infrastructure). In other words, public investments are also public choices and while it is important to develop standards for advanced technologies it is important to consider that this kind of spending comes at the expense of other priorities (such as housing the homeless or filling in potholes).

The second reason this book is falling short for me is I feel like it could benefit from a broader discussion of technology and research in society. Obviously, society is still benefiting from research conducted decades ago by federal agencies like NASA and ARPA but it seems like when we consider why public research might become underfunded we have to consider the spirit of the times and what the current needs of society are.

I am likely being too critical here. I do appreciate the motives of these authors and I also like the references to the OMB papers. I guess it just didn't quite live up to my expectations, nor did it restore my faith in the field of economics.

[Jysoo]

The authors start with a brief introduction to government’s role on innovation, followed by a list of methods which are being used in evaluating public innovation program. They present the four programs carried out by NIST, which have been evaluated with different methods.