Innovation is a primary source of economic growth, and is accordingly the target of substantial academic and government attention. Grants are a key tool in the government’s arsenal of tools to promote innovation, but legal academic studies of that arsenal have given them short shrift. While patents, prizes, and regulator-enforced exclusivity are each the subject of a substantial literature, grants are typically addressed briefly, if at all. According to the conventional story, grants may be the only feasible tool to drive basic research, as opposed to applied research, but they are a blunt tool for that task.
Three critiques of grants underlie this narrative: grants are allocated by government bureaucrats who lack much of the relevant information for optimal decision-making; grants are purely ex ante funding mechanisms and therefore lack accountability; and grants misallocate risk by saddling the government all the downside risk and giving the innovator all the upside. These critiques are largely wrong. Focusing on grants awarded by the National Institutes of Health, the largest public funder of biomedical research, this Article delves deeply into how grants actually work. It shows that grants are awarded not by uninformed bureaucrats, but by panels of knowledgeable peer scientists with the benefit of extensive disclosures from applicants. It finds that grants provide accountability through repeated interactions over time. And it argues that the upside of grant-investments to the government is much greater than the lack of direct profits would suggest.
Grants also have two marked comparative strengths as innovation levers: they can support innovation where social value exceeds appropriable market value, and they can directly support innovation enablers — the people, institutions, processes, and infrastructure that shape and generate innovation. Where markets undervalue some socially important innovations, like cures for diseases of the poor, grants can help. Grants can also enable innovation by supporting its inputs: young or exceptional scientists, new institutions, research networks, and large datasets. Taken as a whole, grants do not form a monolithic, blunt innovation lever; instead, they provide a varied and nuanced set of policy options, and we should recognize and develop their usefulness in promoting major social goals.
In the domain of technology startups, biotechnology has often been considered as specific. Their unique technology content, the type of founders and managers they have, the amount of venture capital they raise, the time it takes them to reach an exit as well as the technology clusters they belong to are seen as such unique features. Based on extensive research from new databases, the author claims that the biotechnology startups are not as different as it might have been claimed: the amount of venture capital raised, the time to exit, their geography are indeed similar and even their equity structure to founders and managers have similarities. The differences still exist, for example the experience of the founders, the revenue and profit level at exit.
Regulation and Poverty: An Empirical Examination of the Relationship between the Incidence of Federal Regulation and the Occurrence of Poverty Across the StatesMay 9, 2018
We estimate the impact of federal regulations on poverty rates in the 50 US states using the recently created Federal Regulation and State Enterprise (FRASE) index, which is an industry-weighted measure of the burden of federal regulations at the state level. Controlling for many other factors known to influence poverty rates, we find a robust, positive, and statistically significant relationship between the FRASE index and poverty rates across states. Specifically, we find that a 10 percent increase in the effective federal regulatory burden on a state is associated with an approximate 2.5 percent increase in the poverty rate. This paper fills an important gap in both the poverty and the regulation literature because it is the first paper to estimate the relationship between these variables. Moreover, our results have practical implications for federal policymakers and regulators, because the increased poverty that results from additional regulations should be considered when weighing the costs and benefits of additional regulations.
via Regulation and Poverty: An Empirical Examination of the Relationship between the Incidence of Federal Regulation and the Occurrence of Poverty Across the States by Dustin Chambers, Patrick A. McLaughlin, Laura Stanley :: SSRN
Governments and firms often use committees of experts to help them make complex
decisions, but conflicts of interest could bias experts’ recommendations. We focus on whether
financial ties to drug companies bias FDA drug advisory committee (AC) members’ voting on
drug approval recommendations. We find little significant evidence that AC members vote in
their financial interests. We find stronger evidence that experts’ characteristics such as expertise
level or associations with advocacy groups drives voting tendencies (biases) either for or against
approval. We show that a Congressional Act that effectively excluded financially-conflicted AC
members resulted in a sharp drop in average AC member expertise, and an unintended increase
in approval voting. Our results have implications for the popular goal of eliminating financial
conflicts from all medical decisions. Eliminating conflicts could sharply reduce the level of
expertise of the decision makers and lead to unexpected voting tendencies.
On January 4, 2018, Attorney General Jeff Sessions issued a memorandum immediately rescinding the Obama Administration’s long-standing guidance limiting federal enforcement of medical marijuana. Federal law creates harsh penalties for the cultivation, distribution, and possession of marijuana, which Sessions deemed a “dangerous drug” and a “serious crime.” The memorandum places physicians and patients at risk of arrest and prosecution in 29 states and the District of Columbia that have legalized medical use of marijuana (eTable in the Supplement).
This Department of Justice (DOJ) guidance came at a time of increasing acceptance, accessibility, and use of cannabis and its derivatives. According to a 2015 nationwide survey, an estimated 22.2 million individuals in the United States aged 12 years or older reported cannabis use in the past 30 days; 90% said their primary use was recreational, with 10% solely for medical purposes; 36% reported mixed medical and recreational use. A 2017 national poll found that 61% of respondents support legalization of marijuana and 71% oppose federal enforcement. In 2016, an estimated 1.2 million adults accessed medicinal marijuana through state-licensed dispensaries or home cultivation.
Gerontologists have proposed different concepts for ageing well such as ‘successful ageing’, ‘active ageing’, and ‘healthy ageing’. These conceptions are primarily focused on maintaining health and preventing disease. But they also raise the questions: what is a good life in old age and how can it be achieved? While medical in origin, these concepts and strategies for ageing well also contain ethical advice for individuals and societies on how to act regarding ageing and old age. This connection between gerontology and ethics is overlooked by both schools of thought. We thus develop this research programme for a systematic geroethics in four steps. First, we analyze ‘successful ageing’ as put forward by Rowe and Kahn as a paradigmatic example of a gerontological conception of ageing well. Then, in a second step, we move from criticisms within gerontology to an ethical perspective; in particular, we want to clarify the problem of the claim of universal validity of conceptions of the good life. In a third constructive step, we explain how the ‘capabilities approach’ could be applied in this context as a normative foundation for the implicit normative assumptions of gerontological conceptions of ageing well, such as a particular choice of functionings, the ethical relevance of human agency, and the resulting claims of individuals towards society. Finally, using a concept developed by the German philosopher Ursula Wolf, we systematically develop the different aspects of the connection between ageing well and the theory of the good life in their full complexity and show their interconnectedness.
A potential role of social security is to protect individuals who have accumulated little or no assets for retirement. Yet, this type of social safety net could reduce human capital formation by making the life-cycle monetary rewards from education less attractive. For example, social security tax rates are correlated negatively with tertiary educational attainment across OECD countries. We construct a continuous-time overlapping-generations model with endogenous school duration that can account for this correlation, and we use the model to compute the optimal social security tax rate in general equilibrium. Social security in the model provides protection for retirees who arrive at retirement with no assets, and it can also redistribute wealth toward those with low earnings, but the system distorts the level of human and physical capital accumulation. In the presence of these characteristics, the optimal social security tax rate in the model is approximately 10%, which is about half of the OECD average (21%). This result is robust to whether the system is redistributive or earnings based.
Editor’s note: the current SS tax rate in the U.S. is 12.4% (half paid by employer, half by employee). Thus it is approximately one-fourth larger than optimal.