What’s the return on government funding for research?

There are a few places in the academic literature you can look to for insight. Jones and Summers (2021) uses a hypothetical thought experiment to make the case that, on average, every dollar of R&D spent probably generates several dollars in benefits via its long-run impact on economic growth (see What are the returns to R&D? for more discussion). But that result applies only to R&D in general, government and non-government, bundled together. Is government funding above or below this average? This approach can’t say. Moreover, while I find it a compelling thought experiment, at some point we probably want to check the results against data. Fortunately, a set of recent papers help us do that.

This podcast is an audio read through of the (initial version of the) article Government funding for R&D and productivity growth, originally published on New Things Under the Sun.

Articles mentioned

Jones, Benjamin F., and Lawrence H. Summers. 2020. A calculation of the social returns to innovation. NBER Working Paper 27863. https://doi.org/10.3386/w27863

Fieldhouse, Andrew, and Karel Mertens. 2023. The Returns to Government R&D: Evidence from U.S. Appropriations Shocks. Federal Reserve Bank of Dallas Working Paper 2305. https://doi.org/10.24149/wp2305r2

Dyevre, Arnaud. 2024. Public R&D Spillovers and Productivity Growth. Working paper.

Moretti, Enrico, Claudia Steinwender, and John Van Reenen. 2025. The Intellectual Spoils of War? Defense R&D, Productivity, and International Spillovers. The Review of Economics and Statistics 107(1): 14-27. https://doi.org/10.1162/rest_a_01293

Which kind of inventor (or scientist) is going to benefit more from artificial intelligence: novices or experts? In theory, it can go either way.

This podcast is an audio read through of the (initial version of the) article Do prediction technologies help novices or experts more?, originally published on New Things Under the Sun.

Articles Cited
Nagaraj, Abhishek. 2021. The private impact of public data: Landsat satellite maps increased gold discoveries and encouraged entry. Management Science 68(1): 1-808. https://doi.org/10.1287/mnsc.2020.3878

Kao, Jennifer L. 2023. Mapping the cancer genome and R&D decisions in the pharmaceutical industry. SSRN Working Paper 3883041. https://doi.org/10.2139/ssrn.3883041

Tranchero, Matteo. 2024. Finding diamonds in the rough: data-driven opportunities and pharmaceutical innovation. Working paper.

Toner-Rodgers, Aidan. 2024. Artificial intelligence, scientific discovery, and product innovation. Working paper.

Some inventions and discoveries make the inventive process itself more efficient. One such class of invention is the prediction technology. These can take a lot of forms. AI is one example of a technology that can help scientists and inventors make better predictions about what is worth trying as a candidate solution to a problem, but as we’ll see, there are many other kinds of prediction technology as well.

This podcast is an audio read through of the (initial version of the) article Prediction Technologies and Innovation, originally published on New Things Under the Sun.

Articles mentioned:
Hoelzemann, Johannes, Gustavo Manso, Abhishek Nagaraj, and Matteo Tranchero. 2024. The streetlight effect in data-driven exploration. NBER Working Paper 32401. https://doi.org/10.3386/w32401

Kim, Soomi. 2023. Shortcuts to innovation: the use of analogies in knowledge production. Working paper.

Tranchero, Matteo. 2024. Finding diamonds in the rough: data-driven opportunities and pharmaceutical innovation. Working paper.

Kao, Jennifer L. 2023. Mapping the cancer genome and R&D decisions in the pharmaceutical industry. SSRN Working Paper 3883041. https://doi.org/10.2139/ssrn.3883041

Toner-Rodgers, Aidan. 2024. Artificial intelligence, scientific discovery, and product innovation. Working paper.