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Measuring The NASA Stimulus Measuring The NASA Stimulus

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TECHNOLOGY

Measuring The NASA Stimulus

Estimates Vary Widely On How Much The Space Agency's Spending May Benefit The Economy

There's no doubt that NASA spending -- as with the spending of any government agency -- can benefit the economy directly through the purchase of goods and services, and indirectly by inspiring industries that spin off from its technologies.

But how much of a benefit is an open question -- one that most researchers have given up trying to resolve.

 

This question becomes more pertinent than ever as NASA proposes to issue a series of technological challenges through its $572.2 million Space Technology Program, an initiative modeled after the Pentagon's Defense Advanced Research Projects Agency.

Perhaps partly due to the experimental nature of the program, which makes it difficult to predict what technologies would make the cut for development and who would use them, deriving a specific return on investment isn't included in the agency's FY11 budget proposal. Instead, it promises Congress that the program will help build a "more robust national capability for space activities that will improve our competitive posture in the international marketplace, enable new industries and contribute to economic growth."

Most of the academic and NASA-related studies published between the mid-1960s and 1980s agree that NASA benefits the economy, but "economists are not in agreement in finding a clear and best approach to measurement," wrote Henry R. Hertzfeld, research professor for George Washington University's Space Policy Institute, in a 1998 compilation of economic studies focused on NASA. "It is also clear that no one measure is a comprehensive indicator of NASA impacts and benefits," he added.

 

"There are many things we just do better thanks to space investment, big things," such as telecommunications, Hertzfeld said in an interview. But separating out NASA's contributions to a particular industry such as telecom, much less to the entire economy during the past 60 years from all other contributions and influences is difficult and costly, he said.

Starting in the 1980s, much of the economic research and policy directives began to move away from the overall stimulative effects of NASA spending and focused on other issues, such as the agency's role in the commercialization of space.

NASA spending has caused "technological advancement to occur at an earlier time than it would have occurred otherwise" if it would have indeed occurred at all, an early Denver Research Institute study concluded.

But placing a monetary value on those benefits proved more difficult, even for one of NASA's greatest achievements. The "fact remains that we got to the moon in a decade, but are, as yet, unable to fully measure the present and future economic impact of the science and technology accumulated on the way to the moon (or the aggregate effect of technological progress in general)," noted the authors of a 1971 Midwest Research Institute study. No one's ever really resolved the uncertainty.

 

And as a result, researchers over the years have come up with a wide array of returns on investment for NASA spending. Estimated ratios of revenue generated compared to spending have been as high as 14-to-1.

Some early academic and other studies "made very 'generous' assumptions about the spinoffs, goods and services produced as a result of NASA's investments," G. Scott Hubbard, a consulting professor at Stanford University, said in an e-mail. A study commissioned by Hubbard in the mid-2000s when he was director of NASA's Ames Research Center in California on the center's local economic impact found a "more conservative" 2- to 3-to-1 ratio.

Trying to find a precise value for the economic benefits of NASA spending, though, may miss the point as long as it's acknowledged that the spending has at least some positive returns, Hertzfeld argues. He said that for a mission-focused organization like NASA, which isn't making a play for profits, any ratio of economic benefits versus spending that exceeds 1-1 "is a success."

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