Report Gauges Economic Impact of Human Genome Project

By Donald Zuhn --

Earlier this month, the Battelle Memorial Institute announced the issuance of a report concerning the economic impact of the Human Genome Project.  In the report, the research group indicated that the return on the $3.8 billion the U.S. government invested in the project between 1988 and 2003 totaled $796 billion.  The report also indicated that the project has created some 310,000 jobs (as of 2010), generating $244 billion in total personal income.  In 2010 alone, the project and associated genomics research and industry activity generated $67 billion in economic output, supported jobs that produced $20 billion in personal income, and provided $3.7 billion in federal taxes -- almost paying back the government's total investment in the project in a single year.  In addition, Battelle noted that the project had launched a "genomic revolution" that would "create significantly more jobs in the future."

The report also noted that the project led to significant breakthroughs including new forms of personalized medicine and genetics therapy, greater productivity in agriculture, and potential sources of renewable energy.  Life Technologies CEO Greg Lucier (the report was sponsored by Life Technologies' foundation) stated that "[f]rom a simple return on investment, the financial stake made in mapping the entire human genome is clearly one of the best uses of taxpayer dollars the U.S. government has ever made," adding that "[t]his project has been, and will continue to be, the kind of investment the government should foster."

The report reached four main conclusions:

1.  The economic and functional impacts generated by the project are already "large and widespread."  As discussed above, the project generated a total economic output of $796 billion between 1988 and 2010, generating 310,000 jobs (and 3.8 million job-years of employment) and $244 billion in personal income (or $63,700 per job-year).

2.  The federal government invested $3.8 billion in the Human Genome Project from 1990 to 2003, which corresponds to $5.6 billion in 2010 dollars, and provided a return on investment of 141 to 1.

3.  The impacts of the project are just beginning.  The report noted that "large scale benefits in human medicine and many other diverse applications are still in their early stages," stating that "[t]he best is truly yet to come."

4.  The project is "arguably the single most influential investment to have been made in modern science and a foundation for progress in the biological sciences moving forward."

According to the report, the total effort to decode the human genome involved many public and private players over many more years, and the work of entities such as Celera Genomics played an important part, and Battelle's analysis of the functional impacts of the Human Genome Project necessarily included all these contributions.

Comments

[Bob Cook-Deegan]

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.

[6]

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?

[Simon Tripp]

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/