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NIH to examine payback on research grants

By Karen Weintraub
Globe Correspondent / June 21, 2010

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The National Institutes of Health spends more than $21 billion a year on research grants, much of it going to Massachusetts scientists. But it’s unclear how much benefit all this taxpayer spending brings.

Ditto for the more than $6 billion NIH spent in stimulus money this year, and for the rest of the more than $140 billion the federal government pays for scientific research every year.

Though it seems obvious living in Boston that this research creates jobs, generates knowledge, and leads to life-improving innovations, there is very little reliable science to prove this. No one knows how the benefit of a dollar spent on research compares with the ripple effects from a dollar spent repairing roads or building schools, for instance. Or whether a federal dollar invested in engineering research provides more or less bang than a buck invested in medical or energy research.

“When you talk about basic science, it’s very hard to say what is the impact of this, how many companies have been formed, etc.,’’ said Stefano Bertuzzi, a neuroscientist and health science policy analyst with the NIH.

At the beginning of the month, the NIH, in cooperation with other federal agencies, launched an initiative to monitor the impact of federal science investments in universities, called “Science and Technology for America’s Reinvestment: Measuring the Effect of Research on Innovation, Competitiveness and Science,’’ or STAR METRICS. One key effort will be to count the number of people whose salaries are paid by federal grants — a seemingly simple task that is currently impossible because of the way grant data are collected, said Julia I. Lane, program officer with the National Science Foundation’s Science of Science and Innovation Policy program.

“We basically don’t have any way of knowing who is touched by science funding,’’ Lane said.

Even if it can’t be quantified precisely, there’s no doubt that scientific research is an economic engine — partic ularly in Boston, Cambridge, and surrounding communities. The NIH sends more than 10 percent of its research grants to Massachusetts, funneling more than $2 billion a year into the local economy.

“There’s a definite quantifiable ripple effect’’ to that spending, said Kevin Casey, Harvard University’s associate vice president for government, community and public affairs. “People can quibble about how powerful it is, but it’s certainly a pretty strong one.’’

In a 2008 report, Harvard estimated that its $3.5 billion annual budget generated $4.8 billion for the local economy. About 90 percent of the university’s revenue came from outside Massachusetts, but $2.6 billion of it was spent locally, according to the report, “Investing in Innovation.’’

Research funding sent to the region tends to stay here, Casey said, because so many of the equipment suppliers and medical device makers are here, too, providing a bigger ripple effect than it might for other communities where a large portion of the money is funneled outward.

There are two types of economic benefits from scientific research, said Daron Acemoglu, a professor of applied economics at MIT: the direct result of dollars spent and the new discoveries and innovations generated by the research.

Acemoglu said he thinks the short-term direct benefits of government funding for research have been exaggerated. Spending $6 billion of federal stimulus money on scientific research is great for the researchers, Acemoglu said, but it’s not a quick fix for the dragging economy.

The people who will get jobs because of research funding are highly educated, skilled workers — not those who are losing jobs because of the recession, he said.

Technological innovations don’t always create jobs either, he said. Think of the robotic advances that allow machines instead of people to cart stuff along factory floors and the Internet sales that allow stores to cut down on personnel and rent.

Still, innovation clearly leads to economic growth, according to Martin J. Buxton, director of the Health Economics Research Group at Brunel University, in West London. Buxton helped write a 2008 report that found that every public or charitable dollar invested in cardiovascular research in the United Kingdom between 1975 and 1992 yielded 39 cents of benefits every year in perpetuity.

But Buxton cautioned that the return on investment is largely determined by how long it takes to invent a technology or develop a drug.

By his estimates, it takes about 17 years on average for money invested in medical research to pay off for the government; basic research that gets to a clinic faster will pay off sooner.

How much it pays off is still a matter of debate, said Iain M. Cockburn, a professor in Boston University’s School of Management Strategy and Innovation.

How do you put a value on the research that led to Facebook, Cockburn asked rhetorically. The human genome project, on which the government spent more than $3 billion, didn’t lead immediately to a cure for cancer — but it will continue paying scientific and economic dividends for decades. And that payoff will probably come in ways we can’t possibly predict today, he said.

“Investments in science are more of the gift that keeps on giving,’’ Cockburn said. “You’re also buying the possibility of a winning lottery ticket and a huge breakthrough in the future.’’