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Impact of science a stakeholder's perspective

Paula Stephan Georgia State University & NBER • Discuss relationship between scientific research and economic growth and methods used to explore the • Make case that although there is strong relationship, caution is called for in assuming that relationship is either straightforward or immediate • Conclude by discussing chal enges faced by public institutions that support research and universities where research is conducted Paula Stephan Georgia State University & Ways to Examine Impact of Publicly Funded Research on Development and Growth • Examples of specific outcomes • Surveys • Econometric modeling Paula Stephan Georgia State University & NBER Examples of "Examples" • Lasers, which owe an intellectual debt to work of graduate student at Columbia University in 1950s. • MRI technology had its origins in work of Edward Purcell of Harvard and Felix Block of Stanford who independently discovered nuclear magnetic resonance in 1946. • Global positioning devices – Would not have been possible without development of atomic clocks. Idea of using atomic vibration to measure time was first suggested more than 130 years ago by Lord Kelvin; – Practical method for doing so developed in 1930s by Isidor Paula Stephan Georgia State University & NBER Examples Continued • Bar codes which can trace their origin to Rutgers • Superconductivity, first discovered in 1911 at the University of Leiden • Modern high capacity hard drives would not be possible were it not for the research of Albert Fert and Peter Gruenberg in the 1980s. Paula Stephan Georgia State University & NBER Examples Continued • Discovery of method for coupling two different (or same) carbon groups by Richard Heck in the 1960s and Akira Suzuki and Ei-ichi Negishi in the 1970s (Nobel prize shared in 2010). • Methods they discovered now widely used in industry and research in variety of applications including: pharmaceuticals, agricultural chemicals and electronic light-emitting diodes used in the production of extremely thin monitors. Paula Stephan Georgia State University & Three-quarters of most important therapeutic drugs introduced between 1965 and 1992 had origins in public sector research. Almost all important vaccines introduced in past 25 years have come from research conducted in the public sector Life expectancy has increased by more than 14 years since 1940, primarily because of advances in research, such as development of antibiotics and effective treatment of cardiovascular disease Heck's method for carbon-carbon bonding was applied by Merck in early 1990s to create drug losartan for treatment of hypertension. Work of Michael Brown and Joe Goldstein in the 1970s led to the introduction of the first statin drug, in 1987, to lower cholesterol Stephan Georgia State University & NBER • Studies that ask firms the source of their ideas for new products and innovations – Mansfield estimates that 11 percent of the new products and 9 percent of new processes introduced in 76 firms interviewed could not have been developed (without substantial delay) in the absence of recent academic research – Other surveys, such as that of Cohen et al., of R&D managers show importance of university research for certain sectors, especially, for example, in pharmaceuticals; also finds that public research is even more likely to contribute to the completion of a project rather than to suggest a new project Paula Stephan Georgia State University & NBER Econometric Studies Studies that estimate rate of return to publicly funded agricultural research—estimate rates around 18% Recent study by Martin Buxton and col eagues that finds an internal rate of return of 10% of publicly-funded medical research in UK Studies that estimate contribution of stocks of knowledge (using bibliometric measures) to economic growth—Jim Adams – Finds stock of knowledge directly relevant to industry accounts for 50 percent of growth in total factor productivity. – Lags are on order of 20 years Studies that estimate social rates of return to publicly funded R&D which draw on production function approach laid out initial y by Zvi Griliches (Hall, Mairesse, Mohnen) Paula Stephan Georgia State University & NBER

Paula Stephan Georgia State University & • Regardless of approach • Publicly funded research has a reasonably high rate of return • With caveat that – It is difficult to estimate precise rates of return – Lags can be quite long Paula Stephan Georgia State University & NBER Yes, there is a relationship between publicly funded research and economic growth and development Paula Stephan Georgia State University & But Caution Is Called For… • Much of research of universities and public research institutions cannot instantly be transformed into new products and processes – Lags can be quite long, as examples of atomic clocks, MRI, carbon-carbon bonding show; – Considerable investment and know-how on part of the private sector is required to translate research into new products and processes Paula Stephan Georgia State University & Caution continued • There are false hopes and dry holes • Research that looks promising can fail to deliver or fail to deliver on the predicted timeline – Discovery of cystic fibrosis gene in 1989 brought hope for gene-based treatments. Until quite recently it was fair to say that, "payoff remains just around the corner. " • Now a drug on market—Vertix Pharma with drug – "War on Cancer" declared by Richard Nixon more than 40 years ago has yet to be "won" Paula Stephan Georgia State University & Caution: Not Everything is about • Some of what science produces is intangible and hence difficult—if not impossible--to – The wonder experienced by seeing pictures taken from the Hubble telescope – The reduction in anxiety among parents who no longer fear their children will get polio Paula Stephan Georgia State University & Lack a Counterfactual • Policy makers often lack a counterfactual • Just because publicly funded research led to the creation of a new product or process it does not necessarily follow that we would not have had the new product or process without Paula Stephan Georgia State University & Challenges faced by public institutions that support scientific research and universities where research is conducted Paula Stephan Georgia State University & • Educate public to fact that lags can be long • Recognize that bibliometric measures—especially short run bibliometric measures—can miss "big • Not succumb to "kil ing the goose who lays the golden egg" by focusing all resources and effort on translational research • Not over exaggerate the benefits from research • Not become overly risk averse • Related challenge of developing new metrics Paula Stephan Georgia State University & Lags and Bibliometric Measures • Examples show just how long lags can be • Yet pressure on funders and universities to show impact in the short run • Often do so by looking at such things as Impact Factor of Journal or three-year citation window on research Paula Stephan Georgia State University & Short Windows Can Miss Important • Work by Wang, Veugelers and myself studies "novel research"—research that makes new combinations of existing knowledge • Find that if one examines such research in a 13-year window, it has a disproportionate impact as measured by • But in short run "novel" research receives fewer citations; Also more likely to be published in low impact journals • Yet funding agencies rarely use a long window to access the contribution of the researchers they support and the tenure clock in the United States is incompatible with such Paula Stephan Georgia State University &

Don't Kil the Goose that Lays the Funding agencies need to resist temptation to focus resources primarily on research that can have effects in short run– doing so has potential of jeopardizing investments in basic research and thus "kil ing the goose that lays the golden egg;" yet public agencies such as NIH in US are tempted to focus on "translational" Universities need to resist the temptation, in looking for resources, to overemphasize short term economic benefits associated with university research or that universities are primarily about growth--University of California at Merced; university community can lose credibility Paula Stephan Georgia State University &

Resist temptation to inflate benefits arising from funded research • Battelle study of return to the Human Genome Project— "how a 3.8 billion dollar investment drove $796 billion in economic impact, created 310,000 jobs and launched the genomic revolution"—updated in 2013 to an estimate of nearly $1 trillion • Cited by Francis Collins Paula Stephan Georgia State University & Encourage Risk Taking • Major breakthroughs in science often come from individuals following a risky research agenda • Yet agencies, in an effort to be accountable, are arguably increasingly risk averse • Scientists, in an effort to get support for research, are increasingly risk averse • This can put a damper on science—incremental research is beneficial but if everyone does incremental research we have a problem Paula Stephan Georgia State University & • ERC is concerned about this—everyone talks about wisdom of supporting some risky research, but few vote to support risky • NIH and NSF in US face this charge routinely Paula Stephan Georgia State University &

James Rothman, 2013 Nobel Laureate in Physiology or Medicine, Comments on Risk Rothman told interviewer that "I had five years of failure, "he was grateful started work in really, before I had the first the early 1970s when the federal initial sign of success. And government was willing to take much bigger risks in handing out I'd like to think that that funding to young scientists" kind of support existed today, but I think there's less of it. And it's actually becoming a pressing national issue, if not an international issue." Nobel Laureate, Physiology or Medicine, 2013 Interview on NPR Develop New Metrics • Mindful of public's appetite for indicators • Look for near term indicators of research that has potential of contributing to economic growth in the – Search for predictive measures, such as combining novel ideas, that have been shown to correlate with frontier research and can be measured in the near term Paula Stephan Georgia State University & NBER Do Not Forget Placements of "The best way to send information is to wrap it up in a person"* J. Robert Oppenheimer *"The eternal apprentice," Time Magazine, vol. 52, p. 81 Paula Stephan Georgia State University & NBER Availability of Placement Information • Despite important role newly trained scientists play in transmitting knowledge and networking between companies and basic researchers, very few universities in US or Europe keep track of placements. • Indeed many universities—at least in the United States--have resisted making placement information available Paula Stephan Georgia State University & NBER • Build on administrative records at universities related to federal funding • Project led by Julia Lane, Professor, Wagner School, New York University • Scrape information from these records including names of graduate students and postdoctoral trainees supported on grants. • Link these names to Census Bureau data which captures information on all jobs and all businesses in the United States Paula Stephan Georgia State University & • Currently doing match at US Census Bureau for 8 universities • Match approximately 2000 recent PhDs in science and engineering from these 8 universities who are supported on federal research grants while graduate students • Determine sector where they work • Average wage of firms where they work Paula Stephan Georgia State University & Preliminary Findings for Recent PhDs • Approximately 42.5%work in industry • Approximately 7.5% work in government • Approximately 50% work in academe—many as postdoctoral researchers • Those in industry work in firms that pay significantly higher average wages Paula Stephan Georgia State University & • Approach of matching PhD recipient data to US Census Bureau data is scalable to other • Can be extended to postdoctoral researchers Paula Stephan Georgia State University & • Convince you that a relationship exists between scientific research and economic • But that caution is called for in interpreting • As a result universities and public institutions face a number of challenges in making their case for funding and support of researchers Paula Stephan Georgia State University & Questions/comments • [email protected] Paula Stephan Georgia State University &

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