Public Policy towards Science : Picking Stars or Spreading the Wealth ? - article ; n°1 ; vol.79, pg 63-75

Ashish Arora, Alfonso Gambardella

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Revue d'économie industrielle - Année 1997 - Volume 79 - Numéro 1 - Pages 63-75
Ce papier fournit un nouveau fondement rationnel pour le financement public de la recherche scientifique. Nous montrons que les financements industriels de la recherche scientifique conduisent à une allocation de ressources privilégiant de façon excessive les scientifiques ayant une réputation ancienne très forte (les « étoiles »). Ceci, est dû à ce que l'industrie a moins d'incitation que la société à financer des chercheurs simplement en vue de tester leur capacité.
This paper provides another rationale for public funding of scientific research. We argue that industry funding of scientific research will lead to an excessive allocation of resources to scientists with greater past reputation (the « stars »). This is because industry will have fewer incentives than society as a whole to fund researchers (e.g. young people) just for the sake of assessing whether they are « able » or not. Not only will public agencies fund less prominent researchers as well, but we show with a simple model that this strategy is efficient in the long run.
13 pages
Source : Persée ; Ministère de la jeunesse, de l’éducation nationale et de la recherche, Direction de l’enseignement supérieur, Sous-direction des bibliothèques et de la documentation.

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• Publié par: REVUE_D-ECONOMIE_INDUSTRIELLE
• Publié le: 01 janvier 1997
• Nombre de lectures: 6
• Langue: English
• Poids de l'ouvrage: 1 Mo

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Ashish Arora
Alfonso Gambardella
Public Policy towards Science : Picking Stars or Spreading the
Wealth ?
In: Revue d'économie industrielle. Vol. 79. 1er trimestre 1997. pp. 63-75.
Résumé
Ce papier fournit un nouveau fondement rationnel pour le financement public de la recherche scientifique. Nous montrons que les
financements industriels de la recherche scientifique conduisent à une allocation de ressources privilégiant de façon excessive
les scientifiques ayant une réputation ancienne très forte (les « étoiles »). Ceci, est dû à ce que l'industrie a moins d'incitation que
la société à financer des chercheurs simplement en vue de tester leur capacité.
Abstract
This paper provides another rationale for public funding of scientific research. We argue that industry funding of scientific
research will lead to an excessive allocation of resources to scientists with greater past reputation (the « stars »). This is because
industry will have fewer incentives than society as a whole to fund researchers (e.g. young people) just for the sake of assessing
whether they are « able » or not. Not only will public agencies fund less prominent researchers as well, but we show with a simple
model that this strategy is efficient in the long run.
Citer ce document / Cite this document :
Arora Ashish, Gambardella Alfonso. Public Policy towards Science : Picking Stars or Spreading the Wealth ?. In: Revue
d'économie industrielle. Vol. 79. 1er trimestre 1997. pp. 63-75.
doi : 10.3406/rei.1997.1653
http://www.persee.fr/web/revues/home/prescript/article/rei_0154-3229_1997_num_79_1_1653Ashish ARORA
Heinz School of Public Policy,
Carnegie Mellon University, Pittsburgh
Alfonso GAMBARDELLA
Istituto di Studi Azzendali
University of Urbino, Italy
PUBLIC POLICY TOWARDS SCIENCE :
PICKING STARS OR SPREADING THE WEALTH ? (*)
Mots d'auto-renforcement. clés : politique publique, nouvelle économie de la science, incitations, mécanismes
Key words : Public policy, new economics of science, incentives, self-reinforcing, mechan
isms.
I. — INTRODUCTION
In discussing the sub-optimal incentives of profit-seeking agents to invest in
science, Arrow (1 962) pointed out the « lucky accident » for society of indivi
duals who undertake teaching and research irrespective of the pursuit of eco
nomic rents. There is another important lucky accident, however, to which
economists have not paid sufficient attention. The scientific community has
developed over time a propensity towards communication of research (Merton
1957 and 1973 ; Ben-David, 1971 ; De Solía Price, 1963). This was prompted
by historical circumstances. Kings and princes (viz., the early « patrons » of
science) were unable to evaluate the ability and output of the scientists whom
they employed. Hence, they were forced to rely on peer evaluation to solve the
agency problem (David, 1991). This gave rise to the system that we see today,
where priority and disclosure of scientific discoveries are accorded great
importance. In addition, the need for disclosure and communication led to a
standardization of the language of scientific discourse. This has had important
implications for the growth of the stock of knowledge by enabling researchers
to build upon previous knowledge. It also created the possibility for the effec
tive transfer of information and greater circulation of knowledge (1).
(*) We thank Paul David for long and stimulating discussions on this topic. All errors are ours.
Alfonso Gambardella thanks the Italian National Research Council (CNR) for financial
support (Contract N. 95.04 1. OOCT 1 1).
( 1 ) The lack of a standard for communication of research was a non-negligible problem in the
early history of science. During the Renaissance some scientists understood the process of
combustion as we nowadays do. namely a chemical reaction involving hydrogen and oxy
gen. Others viewed it as the result of a fluidodynamic process a substance cal
led « phlogiston ». The two groups were simply unable to communicate.
REVUE D'ÉCONOMIE INDUSTRIELLE — n° 79, 1" trimestre 1997 63 as Dasgupta and David (1987 and 1994) point out, the rules of However,
openness and prompt disclosure do not apply to another set of activities which
are very similar to the activities of science, to wit technological research in
industry. Profit seeking firms appropriate rents from their research by excluding
others from using the knowledge and information that they embody in new pro
ducts. But the research carried out in industry and in scientific institutions is dif
ferent in another important respect. Historically, the community has
given a great consideration to generality and abstraction. Typically, the contri
bution of scientists (for career or more generally for public recognition) is
valued more highly the more it abstracts from the details of phenomena, dis
cerns their « essential » features, and produces information that can be applied
to a relatively large class of events. In contrast, industry research has to deal
with the specific and the particular. Ultimately, firms have to develop concrete
products. Hence, they have to deal satisfactorily with the details and complexit
y of the application of knowledge to specific contexts, goods and markets.
This implies that the potentially beneficial exchange of technological info
rmation in industry is limited not only by the incentives of agents, but also by the
fact that it is difficult to understand and utilize context-specific information in
other contexts. Thus, technological information generated by one firm under
particular conditions and for particular purposes would be difficult to transfer to
another firm, and it would be even more difficult for the latter to utilize it.
In recent years, the considerable growth of computational capabilities, allied
with significant advances in scientific disciplines, has accelerated the use of
generalized knowledge and abstraction in industrial research. As we discussed
elsewhere, one important implication of this trend is that technological knowl
edge can be expressed in more general and universal ways, and thus, it can be
transferred more easily across differing contexts (Arora and Gambardella,
1994). A closely related implication is that the domains of science and tech
nology are becoming intertwined to a greater extent than before. It is then even
more urgent to heed the call for an economic analysis of the institutions of
modern science (David, 1991 and 1992 ; see also Callón, 1994). A number of
questions arise. What impact will the growing interaction have upon the inst
itutions of science ? How will the organization of industrial research be affec
ted ? What are the relevant public policy issues ?
This essay addresses some of these questions. Section 2 discusses the possibil
ity of a mutual contamination of values and norms of conduct : Industry resear
ch may become more open, whilst academic research may become more secre
tive. Section 3 focuses on the implications of greater industry funding of acade
mia. As suggested by Dasgupta and David (1994), public of academic
research is subject to important self-reinforcing mechanisms — the so-called
« Matthew effect » (Merton, 1968, 1973 and 1988). In essence, scientists with
better publishing records attract more public funding, and hence produce more
and better publications in the future. We show, with the aid of a simple model,
that industry funding of academic research intensifies the Matthew effect :
64 REVUE D'ÉCONOMIE INDUSTRIELLE — n° 79, \" trimestre 1997 Companies are even more likely than public agencies to fund « stars », thereby
amplifying initial differences in research performance. Section 4 speculates
about the implications of this result. Particularly, we argue that in the long run
the Matthew effect may be detrimental even for the same firms that in the short
run find it advantageous to sustain more renowned scientists and institutions.
II. — GENERAL AND ABSTRACT KNOWLEDGE,
INDUSTRY AND THE INSTITUTION OF SCIENCE
The increasing use of general and abstract knowledge in industrial research
implies that the organization of industrial research will tend to change, and it
will tend to acquire features similar to that of university research. Rullani
(1991) argues that, because of the rising complexity and multi-disciplinarity of
knowledge, firms need to resort to cooperative exchanges of information and
resources with other parties. The market may then become a highly inefficient
institution. Market relationships are subject to opportunism, which produces a
less-than-optimal amount of co-operation. Production and exchange then
require other institutional media, of a more co-operative nature, like those that
characterize the production and exchange of science.
Dasgupta and David (1987 and 1994) emphasize the other side of the coin.
They warn that increasing funding of academic research by industry may alter
the norms and values of the scientific community. The scientific community
may become less open, try to protect more forcefully its information