Pure Pedantry

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.

"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 says.

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.

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."

Read the whole thing. There is considerable debate about how returns from research -- particularly pure science research -- can be calculated. The results of these debates will determine how much of our tax dollars we choose to invest.