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The Economics of Physics: The Social Cost-Benefit Analysis of Large Research Infrastructures  

Massimo Florio and Chiara Pancotti

In economics, infrastructure is a long-term investment aimed at the delivery of essential services to a large number of users, such as those in the field of transport, energy, or telecommunications. A research infrastructure (RI) is a single-sited, distributed, virtual, or mobile facility, designed to deliver scientific services to communities of scientists. In physical sciences (including astronomy and astrophysics, particle and nuclear physics, analytical physics, medical physics), the RI paradigm has found several large-scale applications, such as radio telescopes, neutrino detectors, gravitational wave interferometers, particle colliders and heavy ion beams, high intensity lasers, synchrotron light sources, spallation neutron sources, and hadrontherapy facilities. These RIs require substantial capital and operation expenditures and are ultimately funded by taxpayers. In social cost–benefit analysis (CBA), the impact of an investment project is measured by the intertemporal difference of benefits and costs accruing to different agents. Benefits and costs are quantified and valued through a common metric and using the marginal social opportunity costs of goods (or shadow price) that may differ from the market price, as markets are often incomplete or imperfect. The key strength of CBA is that it produces information about the project’s net contribution to society that is summarized in simple numerical indicators, such as the net present value of a project. For any RIs, consolidated cost accounting should include intertemporal capital and operational expenditure both for the main managing body and for experimental collaborations or other external teams, including in-kind contributions. As far as social intertemporal benefits are concerned, it is convenient to divide them into two broad classes. The first class of benefits accrue to different categories of direct and indirect users of infrastructure services: scientists, students, firms benefiting from technological spillovers, consumers of innovative services and products, and citizens who are involved in outreach activities. The empirical estimation of the use value of an RI depends on the scientific specificities of each project, as different social groups are involved to different degrees. Second, there are benefits for the general public of non-users: these benefits are associated with social preferences for scientific research, even when the use of a discovery is unknown. In analogy with the valuation of environmental and cultural goods, the empirical approach to non-use value aims at eliciting the willingness to pay of citizens for the scientific knowledge that is created by an RI. This can be done by well-designed contingency valuation surveys. While some socio-economic impact studies of RIs in physics have been available since the 1980s, the intangible nature of some benefits and the uncertainty associated with scientific discoveries have limited the diffusion of CBA in this field until recently. Nevertheless, recent studies have explored the application of CBA to RIs in physics. Moreover, the European Commission, the European Strategy Forum on Research Infrastructures, the European Investment Bank, and some national authorities suggest that the study of social benefits and costs of RIs should be part of the process leading to funding decisions.

Article

The Evolution of Public Funding of Science in the United States From World War II to the Present  

Kei Koizumi

Large-scale U.S. government support of scientific research began in World War II with physics, and rapidly expanded in the postwar era to contribute strongly to the United States’ emergence as the world’s leading scientific and economic superpower in the latter half of the 20th century. Vannevar Bush, who directed President Franklin Roosevelt’s World War II science efforts, in the closing days of the War advocated forcefully for U.S. government funding of scientific research to continue even in peacetime to support three important government missions of national security, health, and the economy. He also argued forcefully for the importance of basic research supported by the federal government but steered and guided by the scientific community. This vision guided an expanding role for the U.S. government in supporting research not only at government laboratories but also in non-government institutions, especially universities. Although internationally comparable data are difficult to obtain, the U.S. government appears to be the single largest national funder of physics research. The U.S. government support of physics research comes from many different federal departments and agencies. Federal agencies also invest in experimental development based on research discoveries of physics. The Department of Energy’s (DOE) Office of Science is by far the dominant supporter of physics research in the United States, and DOE’s national laboratories are the dominant performers of U.S. government-supported physics research. Since the 1970s, U.S. government support of physics research has been stagnant with the greatest growth in U.S. government research support having shifted since the 1990s to the life sciences and computer sciences.

Article

Physics-to-Technology Partnerships in the Semiconductor Industry  

Robert Doering

The development of physics over the past few centuries has increasingly enabled the development of numerous technologies that have revolutionized society. In the 17th century, Newton built on the results of Galileo and Descartes to start the quantitative science of mechanics. The fields of thermodynamics and electromagnetism were developed more gradually in the 18th and 19th centuries. Of the big physics breakthroughs in the 20th century, quantum mechanics has most clearly led to the widest range of new technologies. New scientific discovery and its conversion to technology, enabling new products, is typically a complex process. From an industry perspective, it is addressed through various R&D strategies, particularly those focused on optimization of return on investment (ROI) and the associated risk management. The evolution of such strategies has been driven by many diverse factors and related trends, including international markets, government policies, and scientific breakthroughs. As a result, many technology-creation initiatives have been based on various types of partnerships between industry, academia, and/or governments. Specific strategies guiding such partnerships are best understood in terms of how they have been developed and implemented within a particular industry. As a consequence, it is useful to consider case studies of strategic R&D partnerships involving the semiconductor industry, which provides a number of instructive examples illustrating strategies that have been successful over decades. There is a large quantity of literature on this subject, in books, journal articles, and online.