Does Scientific Research Cause Economic Growth?

Many scientists say that science should be funded because it leads to economic growth. Today’s discovery, tomorrow’s new product, that sort of thing. It’s certainly plausible that more research will produce more growth.

Terence Kelley, a biochemist who was vice-chancellor of the University of Buckingham, points out that some facts do not support this argument:

Two key pieces, one British, one American. The British one is very simple. The British agricultural and industrial revolutions took place in the 18th and 19th centuries in the complete absence of the government funding of science. It simply wasn’t government policy. The British government only started to fund science because of the Great War [World War I]. The funding has increased heavily ever since, and there has been absolutely no improvement in our underlying rate of economic growth.

But the really fascinating example is the States, because it’s so stunningly abrupt. Until 1940 it was American government policy not to fund science. Then, bang, the American government goes from funding something like $20 million of basic science to $3,000 million, over the space of 10 or 15 years. I mean, it’s an unbelievable increase, which continues all the way to the present day. And underlying rates of economic growth in the States simply do not change.

I believe the connection between research and economic growth is complicated. Veblen was certainly right, “pure” (= useless) research is high-status, “applied” (= useful) research is low-status. In the long run, this is a good way to allocate effort because although almost all the “pure” research is useless, a tiny fraction is not. And that tiny fraction might never have been done if pure research weren’t high-status.

Yet after pure research turns up useful stuff, professional scientists have serious difficulty making something useful from it. Almost all of my discoveries, such as the Shangri-La Diet and the effect of morning faces on mood, relied heavily on pure research. Without the pure research, I couldn’t have made them. The “pure” discoveries I used were well-known yet professional scientists were unable to grasp how they could be turned into something useful. I was able to go further than them for three reasons: 1. I was willing to spend a long time (decades) on a one problem. Professional scientists can’t wait that long. 2. I was trying to find a useful solution. Professional scientists tend to think useful research is low-status, as I said. 3. Studying myself instead of other people made me much more sensitive to unexpected effects.

5 Replies to “Does Scientific Research Cause Economic Growth?”

  1. The fact that pure research is high status would not change if government stopped funding pure research. Einstein gave us the theory that made the laser possible and you can’t give too much credit to the German State or to the UK for that… the idea of the laser was pursued by various academics and finally built at a private company… This all happened before the US had a science policy per se.

    So we are back at the core question asked by Kealey, is government funding for science warranted?

    I have a related (recent) blog post you might enjoy with some hard references that tries to validate Kealey’s point from a government policy point of view:

    Does academic research cause economic growth?

    One could argue that if science wasn’t funded in a socialist manner, then people would have to show more interest in being genuinely useful.

    One step you have not taken, as a researcher, is to go for “true” public funding via sites such as kickstarter. With the kind of research you do, I bet you would get people to support you financially. True: you could never match what the State can offer… (hard to get 300k$ a year through kickstarter)… still, it could be very interesting to try…

    Anyhow, I think that the question Kealey is really asking is what role should the government play in science, if any?

  2. “In the long run, this is a good way to allocate effort because although almost all the “pure” research is useless, a tiny fraction is not.” I’ve always found this argument – or at least, related arguments – dodgy. If you might stumble across potentially useful truths by doing pure research, you might equally stumble across pure truths by doing applied research. Recall that Thermodynamics was discovered because of research into steam engines, not vice versa. Of course the first really good steam engine, Watt’s, presumably benefited from Watt’s spell as a research assistant to Black at Glasgow, but thermodynamics did not develop from Black’s work but from Watt’s.

    Seth: I think both things are true: It helps to work on real-world problems; and it helps to do “pure” research. We need both. The second point was behind the essay “The unreasonable effectiveness of mathematics”. That essay gives many examples.

  3. I disagree that underlying rates of economic growth in the US have not changed. I’ll present a very simple analysis I did a few months ago:

    Using the data from, I did two separate fits for 1790-1929 and 1946-2011, skipping the Great Depression/WWII fluctuation. The post-WWII data is smoother (higher R²) and has a higher slope.

    I certainly do not claim that increased funding of scientific research is solely responsible, nor even that it necessarily contributes (although I think it does), but the premise of unchanging economic growth does not hold.

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