Innovation Policy and the Economy

April 17, 2012
Josh Lerner of Harvard University and Scott Stern of Northwestern University, Organizers

Pierre Azoulay, MIT and NBER; Joshua S. Graff Zivin, University of California at San Diego and NBER; and Gustavo Manso, University of California at Berkeley

NIH Peer Review: Problems and Avenues for Reform

The National Institute of Health (NIH), through its extramural grant program, is the primary public funder of health-related research in the United States. Peer review at NIH is organized around the twin principles of investigator initiation and rigorous peer analysis, and this rare combination has long been a model for science funding agencies throughout the world. However, lean budgets and the rapidly changing ecosystem within which scientific inquiry takes place have led many to ask whether the peer-review practices inherited from the immediate post-war era are still viable for twenty-first century realities. Azoulay, Graff Zivin, and Manso examine two related issues: 1) the aging of the scientist population supported by the NIH; and 2) the innovativeness of the research supported by the institutes. They identify potential avenues for reform as well as a means for implementing and evaluating them.

Fiona Murray, MIT Sloan School of Management

Evaluating the Role of Science Philanthropy in American Research Universities

Philanthropy - gifts from wealthy individuals or grants from private foundations - plays a major role in university-based scientific, engineering, and medical research in the United States, funding (in one form or another) almost 30 percent of this activity. Yet science patronage largely has been overshadowed by the massive rise of Federal research funding and, to a lesser extent, industry funding. Government and industry funding have drawn intensive analysis, partly because their objectives can be measured: governments generally support broad national goals and basic research, while industry finances projects that are likely to contribute more directly to useful products. In contrast, philanthropy's contribution to overall levels of scientific funding and, more importantly, the type of research supported by philanthropy is poorly understood. Nonetheless, one only has to look at named research buildings on campuses and multimillion dollar gifts from wealthy individuals and their foundations to recognize the pervasive role of philanthropic giving to university research. Murray provides the first empirical evaluation of the role of science philanthropy in American research universities. She analyzes the contribution of private donations and grants to universities relative to government funds, and then examines the distribution of this funding across schools, fields, and the fundamental-to-practical research continuum. Finally, she explores some of the implications of science philanthropy in today's climate of funding pressures for research.

Josh Lerner

The Boulevard of Broken Dreams: Innovation Policy and Entrepreneurship

Lerner looks at the ways governments have supported entrepreneurs and venture capitalists around the globe in recent decades. He highlights the fundamental economic problems that motivate these initiatives and the extent of government influence in prompting the growth of existing activity. He also highlights the challenges of these endeavors, reveals the common flaws undermining far too many programs, and discusses evidence regarding how public ventures should be implemented.

Mark A. Lemley, Stanford Law School

Fixing the Patent Office

How can we fix the U.S. Patent and Trademark Office (PTO), allowing patent examiners to effectively distinguish between patentable and unpatentable inventions, without slowing the process to a crawl or wasting money? Lemley reviews the recent literature and considers a number of proposals and their problems. He concludes that we can make the PTO better, but we are unlikely to solve the problem of bad patents altogether. Rather than focusing on adding money, the focus increasingly will be on understanding and changing applicant and examiner incentives.

Jeffrey L. Furman, Boston University and NBER

The Economics of the America COMPETES Acts

The America COMPETES Act (ACA) was one of the most salient bipartisan legislative achievements of the past decade, and potentially is one of the most notable pieces of science-and-innovation policy of the new millennium. However, limited systematic evaluation of the ACA has been undertaken to date. Furman provides an overview of the history, goals, and implementation of the 2007 America COMPETES Act and the 2010 America Competes Reauthorization Act. He highlights the initial aims of the Acts and examines the programs and policies that have received subsequent funding and support. Although the America COMPETES Act was introduced with bipartisan support, fanfare from the business community, and plaudits from the science policy community, the tangible outputs of the Act and its subsequent Reauthorization appear limited, although a number of notable programs have been created.

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