William H. Press2012 President of AAAS(American Association for the

Advancement of Science)

What’s So Special About Science (And How Much Shold We Spend on It?)

Presidential Address: AAAS 2012 Annual MeetingScience Vol. 342, November 2013

2

William H. Press• Professor of computer science and

integrative biology at the University of Texas, Austin

• Member of the President’s Council of Advisors on Science and Technology (PCAST)

• Deputy laboratory director for science and technology at the Los Alamos National Laboratory from 1998 to 2004

3

• His work has spanned a remarkable range of disciplines: from computer science to genomics, statistical methods, astrophysics, and international security

• Best known for the Press-Schechter formalism, which predicts the masses of galaxies within the universe, as well as his work on supernovae to estimate cosmic distances, which helped to discover that the expansion of the universe is accelerating

4

What’s So Special About Science • In today's lean times, we need to articulate

our case more powerfully and in a more sophisticated way than in more prosperous times.

• A skeptical and stressed Congress is entitled to wonder whether scientists are the geese that lay golden eggs or just another group of pigs at the trough.

5

Fig. 2. R&D spending by country in 2011 by percent of GDP and percent of population who are scientists and engineers.

The size of the circles show the country's total R&D spending.

W H Press Science 2013;342:817-822Published by AAAS

6

• Correlation, we know, is not the same as causality. Are we richer because we spend more on R&D? Or do we spend more on R&D because we are richer, and can afford to do so? Or is there some other factor, causative of both?

• Although I am not an economist, I want to give you a simple version of the story, because it is one that I think scientists need to understand as part of making the case for what we do.

• Exponential growth comes from positive feedback, where the production of something enables you to produce even more.

7

• The unexplained part, sometimes estimated as large as 85%, was termed the Solow residual.

• Subsequent work showed that the bulk of the Solow residual could in fact be explained by positing a new factor of production: technological progress.

• Technology is not exactly a form of capital because the technology state of the art is not exactly owned by anyone. Yet it is capable of generating positive feedback.

• As a factor of production, technology produces wealth and produces more technological progress, enabling a virtuous cycle of exponential growth

8

• Annual rates of return on investment (ROI) in basic research—the fuel for technological progress

• Many institutions, including our universities and retirement funds, accept 5% sustained ROI as a decent return. Yet investments in basic research are variously estimated as ultimately returning between 20% and 60% per year

• If that were the whole story, my advice today would be simple enough: Withdraw all your retirement funds and invest them in your laboratory!

• What makes this advice bad is another important concept: appropriability.

• How well do the rewards flow back to the investor who actually takes the risk and puts up the money?

9

• Basic research is a public good. It will benefit all. So, the private sector is likely to under-invest in it.

• The current risk is that also governments under-invest in science: every country tries to gain the benefits of the basic research funded by others, but no country is willing to make investments themselves

• This scenario is what economists call the tragedy of the commons. No one will invest to maintain something that benefits all, given the option of instead being a free rider. Basic research is a common.

10

• The first path forward is to adopt policies that maintain the appropriability of returns from U.S. basic research to the U.S. economy

• To protect and advance basic research and to make basic research more easily translatable into application and technology in a way that remains geographically rooted

11

• A 2009 Harris poll asked the public to name the most prestigious occupations.

• The answers (in order) were firefighter, scientist, doctor, nurse, teacher, and military officer.

• What struck me immediately when I saw this result is that every one of these, except scientist, is an immediate helper occupation. These people save us from fires, prevent attacks, teach our children ….

• By contrast, the value of scientists and the benefit they produce can be very long term. Yet the public perceives scientists as belonging in the same basket of high-prestige helper occupations.

• This tells us something.

12

• A heavy-tailed distribution means that extremely large events are only a bit rarer than mid-sized events.

• In other words, the tail of the probability distribution extends out to the right, so as to allow events of truly huge consequence to occur once in a while—and more than one might think.

• This is the opposite of the so-called normal distribution, where very large events are so exponentially improbable that, in practice, they never occur

13

Heavy-tailed distributionsNormal distribution

14

• Looking at the history of science over the last couple of centuries, it seems evident to me that the benefits of scientific discovery have been heavy-tailed.

• Large and incredibly consequential discoveries are not improbable but do occur relatively often.

• If basic research is a heavy-tailed investment opportunity, what is the optimal investment strategy for nations to make in it?

15

• I call it patient investor's bounty. The player who stays in the game, investing on a continuing, sustainable basis, will be there to reap the rewards of the rare-but-huge heavy-tailed events.

• Stability of investment over the long run is likely to be the best predictor of success in this game

• But what is the right amount to invest in basic research (or, for that matter, in total R&D)?

• As nations compete for economic growth opportunities, it appears that those who spend close to 3% of their GDP on R&D are the ones that compete most successfully

16

• European science has developed mechanisms for obligating nation states to make investments over long periods, for example, to CERN, where the Higgs boson was discovered.

17

EIB UNIVERSITY RESEARCH SPONSORSHIP PROGRAMME

COST BENEFIT ANALYSIS IN THE RESEARCH, DEVELOPMENT AND INNOVATION SECTOR

UNIVERSITY OF MILAN - DEPARTMENT OF ECONOMICS, MANAGEMENT AND QUANTITATIVE METHODSUNIVERSITY OF MILAN - DEPARTMENT OF PHYSICS

CSIL - CENTRE FOR INDUSTRIAL STUDIES

Luxembourg, 24 January 2013

18

• Take stock of the literature on the economic impact of scientific research (fundamental and applied)

• Developing a CBA model for decision making• The CBA model will expand on the standard

framework adopted by the EC adapting the model to the specificities of Large Research Infrastructures (LRI)

OBJECTIVE OF THE STUDY

19

• SPS: the 2nd largest machine in the CERN complex. It started in 1976. in 1983 led to the discovery for which the Nobel prize was awarded to Carlo Rubbia and Simon van der Meer.

• LEP was operational from 1989 to the end of 2000, and it has led to our current understanding of the structure of the fundamental theory of electroweak interactions.

• The LHC is the highest-energy machine currently operating in the world. It started in 2008 and has led to the discover of the Higgs boson.

LRI: PARTICLE ACCELERATORS AT CERN

20

Hard identification, quantification and provision of a conventional welfare metrics for products and benefits of such infrastructures:

– Nature of expected net benefits– Long time span of benefits to occur– Uncertainty and risk– Spillovers and externalities

SPECIFIC METHODOLOGICAL CHALLENGES