Analysing The Economic Payoffs From Basic Research

Abstract

Cost benefit approaches for evaluating the contribution of basic research investment have severe limitations and a number of undesirable consequences. We propose an alternative, information-theoretic, approach for identifying the economic benefits engendered by basic research. We emphasize the role of information linkages, the economic value of both findings and non-findings, and the consequences of disclosure incentives for realizing the economic benefits from basic research investments. We introduce the concepts of homotopic mappings and analogic links as relevant for differentiating among the prospective contributions of competing basic research projects, and we examine how the lumpiness or indivisibility of basic research investments may influence the conduct of basic research. The methodology and reasoning of our approach is illustrated by an examination of the case of basic research in high energy physics.