Value of research exceeds the economic benefits

15 November 2013

Almost everyone agrees that research contributes to prosperity and well-being. But what does investing in knowledge actually yield? The Academy’s ‘Value of research’ committee has explored the possibilities of quantifying the benefits of public investment in knowledge – in research institutes and knowledge workers.

On 15 November 2013, State Secretary Sander Dekker of the Ministry of Education, Culture and Science received the first copy of the ‘Public investment in knowledge and the value of research’ (Publieke kennisinvesteringen en de waarde van wetenschap) report from Academy President Hans Clevers.

When the CPB Netherlands Bureau for Economic Policy Analysis calculates the financial consequences of political programmes – a valuable and globally unique practice – public investments in knowledge and research are limited to their spending effects: they only increase government expenditure. That obstructs the true value of research and makes cutbacks easier. The committee, under the chairmanship of economist Luc Soete, believes that there are opportunities to quantify the benefits of investing in research. First and foremost, the value of research far exceeds the mere economic benefits, which are measurable as a contribution to gross domestic product (GDP).

Macro-economic approach

Hans Clevers overhandigt Waarde van wetenschap aan staatssecreataris Sander Dekker (OCW)At micro-economic level, it is possible to quantify the benefits of investments and/or policy measures in a certain research sub-area. The CPB is already experimenting with evaluating and calculating the effects of research investments by combining these types of econometric effects. However, this is insufficient from a macro point of view because the positive external effects of research – which are difficult to quantify – are not included.

The Committee therefore recommends starting with a macro-economic approach that can analyse the effect of research on GDP. Although these types of econometric studies are available, the results are not always unambiguous. An econometric study focusing on the Dutch situation which systematically compares various model specifications over a longer period would therefore be an important first step.

Various disciplines

To gain a better understanding of the economic benefits of public knowledge investments, the Dutch situation could be compared with that of countries with a similar research system. It is essential to understand that the effect of research policy can only be usefully evaluated in the long term; that is where the effect is felt.

It is difficult to measure the overall economic and social value of research. Researchers from various disciplines should therefore be brought together to find ways of throwing light on this broader value of research.

Research practice has an international character. However, if we are to make use of knowledge generated abroad, we need absorptive capacity. That means that a small country like the Netherlands must continue to invest in research to create and maintain the standard of new knowledge, but also to be able to process ‘external’ knowledge. That is why the role of absorptive capacity must be taken into account in the quantitative analysis of research policy.

You can order or download the ‘Public investment in knowledge and the value of research’ foresight report on the Academy website (Dutch), or download the English summary (pdf).