The Human Genome Project Is Responsbile for Eleventy Gajillion Dollars of Economic Activity

Or something. Nature reports that the estimate of the economic impact of the Human Genome Project has increased–and some people are cranky about that:

But economists who were not involved in the study say that its numbers are not credible. Critics add that its basic approach is flawed, because it quantifies the economic activity generated by the Human Genome Project instead of its impact on human health, which can be judged by metrics such as patient outcomes and production of drugs and diagnostics.

Robert Topel, an economist at the University of Chicago Booth School of Business in Illinois, says that the benefits of health research are not measured in effect on gross domestic product, productivity or jobs. “The question is: what health benefits have people got out of it, and what will they get in the future?” he says.

Actually, the entire point of the Battelle report was to quantify the economic effects, not ones on health, so this strikes me as extremely unfair. That said, the NIH has been inappropriately flogging the Battelle report. Yes, the economic activity generated by the Human Genome Project has been ginormous (‘ginormous’ is a highly technical term). But those gains have to weighed against NIH spending that didn’t lead to eleventy gajillion dollars of activity (actually a 65-fold return). When those are factored in, the return is a bit smaller:

But other studies, although not strictly focused on the economic impact of genomics, have reached more modest conclusions. A broad-based 2009 analysis1 by researchers affiliated with the non-profit National Bureau of Economic Research in Cambridge, Massachusetts, suggested returns of just $2.50–$3 for every dollar spent on research and development.

That’s still pretty good! It’s like food stamp level returns (higher actually), but for lower middle class to upper middle class people. Which is why the returns are so good:

While the most important thing about NIH funding is the science that gets done, the economic consequences are also important. Year after year, one dollar of NIH spending leads to two dollars of economic activity–one of the highest rates of economic activity for any government spending.

The reason is straightforward–most NIH spending travels through many hands before winding up sitting in a bank account. About seventy percent of a grant’s direct costs are salaries, and these are salaries that range from lower-middle class to upper-middle class. While some saving does occur (hopefully), much of the money is spent: just how much savings are grad students, post-docs, and junior lab techs able to save? The remainder is spent on supplies and equipment and these are typically not high profit margin businesses (i.e., the rate of return is low). When universities receive overheads they spend all of the money (if not always wisely…) on things like middle class salaries (staff) and construction (more middle class salaries).

Still seems that TEH SCIENTISMZ!! are a pretty good deal.

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2 Responses to The Human Genome Project Is Responsbile for Eleventy Gajillion Dollars of Economic Activity

  1. Albanaeon says:

    How many people do you know that would pass up a 250-300% return on their investment?

    But I forget, its gubermint and that means its bad no matter what the actual numbers show.

  2. John says:

    You got some links for that food stamp return on investment stuff? I always argue to conservatives that good welfare programs actually grow the economy as a whole but my evidence is more apocryphal.

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