Maximizing Benefits from Research: Lessons from Medicine and Agriculture
Cowling, Ellis B., Sigmon, John T., Putman, Charles E., Issues in Science and Technology
Scientists are fond of asserting that unfettered scientific curiosity leads to previously unimagined understanding of nature and human institutions and that society derives maximum benefits from investments in science when the quality of research is high. Much is said about how competitive methods of decision-making and rigorous peer review enhance the quality of science. Anecdotal evidence is often cited to show how remarkable the societal benefits can be from curiosity-based research. But less is said about aggregate returns to society from investments in the various disciplines or about the relationship between how funding decisions are made and the ultimate benefit to society.
To shed some light on these questions, we look at two broad domains - medicine and agriculture - in which the approach to allocating research funds is very different. Competitive merit review is the dominant method for decisionmaking in the biomedical sciences. Formula funding is the dominant method for making decisions in the agricultural sciences. Our goal is to present some preliminary observations and hypotheses about the comparative costs, influences on science quality, and magnitude of returns to society that result from these two approaches.
In simple economic terms the difference in outcomes is striking. Americans pay a higher percentage of their gross domestic product for health care products and services than any other developed nation of the world - 11.8 percent in the United States, compared with 8.7 percent in Canada, 8.2 percent in Germany, 6.7 percent in Japan, and 5.8 percent in the United Kingdom. Americans pay a lower percentage of their gross domestic product for food and fiber products and services than any other developed nation around the world - 8.7 percent in the United States, compared with 9.4 percent in Canada, 11.5 percent in Japan, 11.8 percent in Germany, and 12.9 percent in the United Kingdom.
In searching for possible explanations, we began by identifying the significant similarities and differences between the two disciplines. Both U.S. agricultural and medical research are extraordinarily productive and the quality of health care and food products and services is exceptionally high. The results of publicly funded U.S. agricultural and biomedical research are published in literature that is freely available in every country of the world. Biomedical research is only part of the total medical research enterprise, just as crop production research is only part of the total agricultural research enterprise of our country. One critical difference is in the market structure of the two industries. In the United States and other developed countries, payments for medical-care products and services are made mainly by third-party payers - commercial or tax-supported insurance and various types of health maintenance organizations. By contrast, payments for food and fiber products and services generally are negotiated directly by cost-conscious consumers and/or distributors. Some of the cost of health care can be attributed to social factors such as poverty, inadequate education, injury-inducing violence, lack of prenatal care, voluntary and involuntary risks, and some fraud, waste, and abuse.
In 1992, the United States spent $7.7 billion on agricultural research and extension activities - about $3.8 billion (49 percent) in the private sector and about $3.9 billion (51 percent) in the public sector. The public sector investments were split almost equally between the federal government and state and county governments. In 1991, the United States spent somewhat more than three times as much on biomedical research as it did on agricultural research. Of the $25.8 billion total, approximately $13.4 billion (52 percent) was spent in the private sector and about $12.4 billion (48 percent) in the public sector. We focus on the public sector investments in research.
In agriculture, tax revenues provided by state, federal, and county governments are combined according to formulae that specify minimum matching requirements (hence the term "formula funding"). …