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« Court Report | Main | Court Report - Part II »

May 23, 2011

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This report's central message is probably right. The natural tendency, however, is to attribute all that happened to the seed funding from NIH and DOE. But NIH and DOE provided only a minority of even the funding . they certainly kicked it off, but it was a big party. And there were, in particular, huge infusions of private funding from companies that were also "investments" and in aggregate exceeded the government and nonprofit R&D . So some of the numbers need to be interpreted carefully. Lots of opportunity for confusing inputs (R&D dollars) and outputs (jobs, private R&D, goods and services). Many things counted as "outputs" here are inputs into future goods and services. The 141 to 1 dollar ration of initial NIH/DOE funding to realized "output" is particularly prone to misintepretation, a highly "political" number that probably should not have been featured in the report, because it is so absurdly high and has such wrongheaded implications (if the gov't just did similar investments now, similar outputs would follow automatically) that it should have at least been nestled in appropriate caveats, and it's too bad because the underlying message of productive investment is almost surely true.

So when are we going to do a rat genome project? Isn't knowing all about their genome really important because of all the testing we do on them?

I am the co-author of the Battelle report. Bob Cook-Degan makes some interesting comments above, so I'd like to respond. On the ROI front, in a case like this involving feredal R&D funding, we work to quantify the economic stimulus spurred by the investment (perhaps we should call it S-ROI, because it certainly is different to the way a private investor would view returns). We termed the government investment "foundational" in the report, noting that it spurred further progress and investment in the sector -- or, as the commentator above says "they kicked it off" -- that is, the NIH and DOE funding of the HGP was the tinder that lit the fire, not the only wood on the fire. Of course, much private capital and further government funding, has flowed in to the genomics sector after the initiation of the HGP. We would note that those in industry and academe consulted during our project were in lock-step with the assessment that these flows occured because of the stimulus of the HGP, and after its initiation, and that sequencing technology was largely moribund prior to this government-sponsored project. Certainly, the total economic impact generated should not be viewed in terms of standard "investor" ROI, and government does not fund R&D on that basis. We agree with Cook-Degan that the 141 to 1 dollar ratio is "prone to misinterpretation" and I appreciate the forum here to address such.
The report methodology used standard, generally accepted input/output regional economic analysis techniques to quantify impacts, and each layer of impacts (direct, indirect and induced) are specified fully in the report. In addition the report includes separate analysis of just the impact of HGP expenditures, the impact of post-HGP federal expenditures in genomics, and the impact of the genomics industry. The analysis covers the time period from initiation of HGP funding (1988) to 2010 (and the "return" discussed is for that entire time period). The report also includes point-in-time analysis of the impact of the genomics-enabled industry for 2010 only. So there is a lot to digest in it.
I concur with Bob Cook-Degan that the HGP was a special project and such high order of magnitude stimulus effects should not be expected from typical government investments in R&D. Everett Ehrlich's new report on NIH funding impacts provides a good overview of more typical level impacts, which are still impressive -- it can be accessed at: http://www.unitedformedicalresearch.com/2011/05/10/investment-in-nih-supported-nearly-half-a-million-jobs-in-2010/

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