Wednesday, June 12, 2013

Economists provide a dose of reality on benefits of the Human Genome Project

Here (HT - Tyler Cowen). This is a great part:
"Julia Lane, who until last year directed the science of science and innovation policy programme at the US National Science Foundation in Arlington, Virginia, calls the Battelle report's numbers "ridiculous". Lane, now the senior managing economist at the American Institutes for Research in Washington DC, says that the analysis "reinforces this notion that science is a slot machine that you put money in, and magic happens and money pops out at the end"."
My prior is that it has probably generated a whole lot value but you don't determine that number by doing a little linear algebra on genomics firms and multiplying it by the money spent. It's not even that jobs are such a bad outcome to think about, but if you're going to think in those terms you don't want to just multiply out how many people are employed - you want to think in terms of some kind of multiplier estimate and the opportunity costs you face (as the article states).

I was talking with Ryan Murphy about green tech multiplier claims a couple weeks ago and the same sort of thing came up. A lot of time what you'll see is something like the ratio of private sector jobs in the green tech industry to publically supported jobs in the green tech industry that comes to a multiplier of ten or something crazy like that. This is obviously a little better than that, but it could still use a lot of work.

Come to think of this, you see this a lot with high skill immigrants too... I believe the latest figure I've heard is that one high skill immigrant creates four jobs for Americans.

Ummm... I don't think so, guys.


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  2. "this notion that science is a slot machine that you put money in, and magic happens and money pops out at the end"

    That is not a bad first approximation of what has happened on average with science spending for the last two hundred years. Economists may want to make fun of science but the fact is that most of you suffer from a well founded sense of "scientific inadequacy" and "physics envy".

    1. Say that again differently - I don't get your point.

      I think "physics envy" is vastly overdiagnosed by people with chips on their shoulder.

      If you are just making an Arthur C. Clarke kind of point I think that's fine but not exactly what Julia Lane was getting at.

  3. Here is my favorite Clarke quote: "Two possibilities exist: either we are alone in the Universe or we are not. Both are equally terrifying.” ― Arthur C. Clarke

    Lane was mocking the belief in high pay-offs from science. She is probably right that the human genome project has not yet produced the benefits claimed by the Battelle but the experience of the last two hundred years is that investing in science has, on average, produced staggering returns for society - in financial terms, in quality of life and in length of life. Battelle may be wrong on the net benefits to date and still be under stating the benefit if we were to include net present value of future benefits.

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