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Opportunities and Benefits as Determinants of the Direction of Scientific Research

  • Mikko Packalen

    (Department of Economics, University of Waterloo)

  • Jay Bhattacharya

    (Stanford University School of Medicine)

Scientific research and private-sector technological innovation are different in terms of objectives, constraints, and organizational forms. For example, the for-profit objective that drives private-sector innovation is absent from much of scientific research, and individual researchers have many times more control in scientific research than in private-sector innovation. These differences and the lack of any obvious objective that would drive the direction of scientific research raise the possibility that the direction of scientific research is exogenous in the sense that it may not be influenced by factors such as the quality of research opportunities and the expected benefit from research that not only drive private-sector innovation but also in part determine the socially optimal allocation of research. Alternatively, some--yet largely unexplored--mechanisms drive also the direction of scientific research to respond to these factors. In this paper we test these two competing hypotheses of scientific research. In particular, we examine whether the composition of medical research responds to changes in disease prevalence and research opportunities. The extent of inventive activity is measured from the MEDLINE database on 16 million biomedical publications. We match these data with data on disease prevalence. We develop and apply a method for estimating the quality of research opportunities from structural productivity parameters. Our results show that the direction of medical research responds to changes in disease prevalence and research opportunities.

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Paper provided by University of Waterloo, Department of Economics in its series Working Papers with number 1014.

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Length: 47 pages
Date of creation: Dec 2010
Date of revision: Dec 2010
Handle: RePEc:wat:wpaper:1014
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