A 1 to 140 ‘return’ from the Human Genome Project?

at 06:02 AM ET, 04/03/2013


(Charles Dharapak/AP)

“Every dollar we spent to map the human genome has returned $140 to our economy -- $1 of investment, $140 in return.”

--President Obama, Remarks by the President on the BRAIN Initiative and American Innovation, April 2, 2013

“Every dollar we invested to map the human genome returned $140 to our economy.”

--Obama, 2013 State of the Union address, Feb. 12, 2013

In announcing a new government initiative to map the brain Tuesday, President Obama repeated a statistic he had used in the State of the Union address—one that we had been meaning to examine more closely.

Certainly, the president’s broader point is correct—federal government investment in research is often an important factor in innovations and scientific achievements that have enhanced Americans’ lives. But 140 times return on investment? That sounded a bit too good to be true.

Let’s dig deeper into the data.

The Facts

The president’s factoid—which he has asserted without citing a source—comes from a 2011 study by the Battelle Memorial Institute titled “Economic Impact of the Human Genome Project: How a $3.8 billion investment drove $796 billion in economic impact, created 310,000 jobs and launched a genomic revolution.”

But the study’s conclusions have generated controversy.

Nature, the prestigious scientific journal, published an article expressing skepticism about the results: “Critics of the report say that the methods used to calculate these numbers, despite being common practice in such studies, are flawed. For example, some of the costs of the project — such as the salaries of those working on it — are counted as benefits.” (To the credit of the Human Genome Project, it has posted the Nature article on its Web site.)

We spoke to Simon Tripp, one of the study’s authors, and he walked us through the numbers. Essentially, the study measures the “ripple effect” of government spending to identify the approximately 20,000 genes in human DNA, much like a stone being thrown in a pond. But judgment calls by the researchers can affect how big that stone is — or how far those ripples are perceived to have gone.

After all, imagine what the ratio would be if you assumed the initial investment by the Wright Brothers led to the aircraft industry — and the space shuttle.

For instance, the Battelle study measured government spending (which was $5.6 billion in inflation-adjusted 2010 dollars) from1988 to 2003, when the human genome project was completed. But it did not include the additional $7 billion in government follow-on spending from 2003 to 2010, even though the study measured the overall economic effects from 1993 to 2010. Tripp acknowledged that the additional government funding contributed to the economic activity in that period, so “you wouldn’t be incorrect” to add that funding to the investment total. That would lower the ratio to about 60 to 1.

The study also did not include funding provided by other governments, such as the United Kingdom, which was a major partner, or business investments. Tripp said the project would not have been feasible without the U.S. contribution, so they only focused on that aspect of the spending. “The Battelle research team interviewed leaders in the industry who cited the HGP as foundational and the core impetus for technological development leading to a growth of the industry (i.e. the leading stimulus effect),” Tripp said.

As for the economic impact, that figure includes “direct effects,” “indirect effects” and “induced impacts” — each of which account for about a third of the total. So, again, the ratio would decline if you decide those later ripples are getting too far from the source. (“Induced impacts” refers to the spending of employees in the genetic industry--i.e, from their salaries--which as Nature noted could also be considered a cost.)

Even if one accepts the ratio in the study, does this actually mean “every dollar we invested to map the human genome returned $140 to our economy,” as the president phrased it? Tripp said that’s not quite what the report said, because it speaks of the initial U.S. spending as “foundational”—meaning it helped to generate that economic activity, not that the economic activity was a direct result from the government spending.

Here’s the key section in the study’s summary:

The federal government invested $3.8 billion in the HGP through its completion in 2003 ($5.6 billion in 2010 $). This investment was foundational in generating the economic output of $796 billion above, and thus shows a return on investment (ROI) to the U.S. economy of 141 to 1—every $1 of federal HGP investment has contributed to the generation of $141 in the economy.

White House spokesman Matt Lehrich cited that same sentence to defend the president’s statement, saying it “is pretty straightforwardly an accurate description of what’s in the study.”

The Pinocchio Test

We’re not going to get into a debate over the difference between “return” and “generation.”

But there is a larger question about presidential assertion of facts.

Without citing a source, the president stated as fact a ratio developed by one study, which has generated some controversy in the scientific community. There’s no question that the gains from federal investment in science have been substantial. The president correctly cited the role of the Apollo space project in the development of the CAT Scan and funding by the National Science Foundation for the impetus for Google.

But was it necessary to lard on those facts with a figure that, depending on how you juggle the numbers, could be much lower? Or to use this factoid in an important speech like the State of the Union address?

The president would have been on more solid ground if he had at least cited a study, but it would have been better to assert the return was substantial without citing a specific number. That claim would not have been in dispute.

One Pinocchio





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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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