Saturday, November 9, 2013

Where Does the Money for Research Come From?

I feel like the average citizen doesn't get to hear much about how the whole research "enterprise" works.  That's part of why I started this blog.  People need to be informed about how research impacts them and what the costs and benefits of certain types of research are so that they can make better judgements about funding, including how their tax dollars are spent.  I'm obviously somewhat biased, because I work in research and think that we need to increase federal research and development (R&D) funding, but I think my beliefs are based on logic and reason.   

You'll sometimes hear scientists or engineers in the news talking about increasing research funding from the federal government, but I don't think the average person has a clear idea of how much money we're talking about, where the money come from, and where it goes.  That's what I want to talk about today.  People need to know what the facts are so that they can make informed judgements.  At the end of the day, people can have whatever opinions they want to have, but only the informed or educated opinions are really valid.  An uneducated or misinformed opinion can be far worse than no opinion at all.

Let's go through a little bit of data and see what we can learn.  We have quite a few graphs to look at, but sometimes pictures can tell a story better than words.

The graphs below are from the National Science Board's Science and Engineering Indicators Digest published in 2012 (the full report is here).  Let's take a look at them and see what we can learn about global and US R&D funding.

We can see from the graph below that global R&D spending has gone up dramatically in the past decade:

Many people may not realize the crucial role that the US and its government play in global R&D.  The US is, in fact the biggest single spender in the world of science and engineering.   When we look below at the R&D spending by country (with the top-10 Asian countries being grouped together), we can see that the US is the largest spender and has been increasing spending up until 2008 (partly, as you may guess, due to the economy crash of 2008): 

While I don't have updated data beyond 2009, I can tell you that the funding levels haven't increased much since 2008 apart from the economic stimulus package that has now ended.  It has actually probably gone down in large part due to the 5% cut brought about by sequestration.  However, what is most striking is that the US and EU  increases haven't quite kept pace with Asia as a whole.  Asian R&D spending is growing faster than the rest of the world.   

When these data are plotted another way below, we can see that between 1996 and 2009, the percentages of total global R&D expenditures by the US and Europe have dropped slightly, while the percent of R&D spending by Asia has increased:

Again, when we look at the percent increases in growth of R&D expenditures of various individual countries, we can again see that the US and EU just haven't kept pace with many Asian countries, particularly China:  

The graph below shows us that, while the US still spends a higher percentage of its gross domestic product (GDP) on research than any other country except Japan and South Korea, China and Korea are increasing much faster than the US or Europe:

Some readers from the US may be saying, "What's you point?  We are still spending more on R&D than any other country, and, we're still the word's only superpower."  There's a flaw in that view point, though.  Quite frankly, a large part of why the US has remained the most powerful nation is its enormous R&D budget and the resulting technology advancements.  If you start to level the playing field, that's not going to continue.  R&D for the military or NASA drives technological advancement, R&D for basic biological and biomedical research drives cures for new diseases.  R&D for chemistry and geology drives the development new fuels as well as better access to old fossil fuels.  R&D for environmental sciences can help us understand climate change and the impacts that it will have.  The more of all of those thing we have, the better off we are.  Not letting US R&D spending increases compete with other countries is not a good thing for the country.     

So where does the US R&D funding come from?  From the graph below, we can see that much of it comes from two sources: Industry (ie, companies, shown in purple), and the federal government (shown in orange):  

Some of our R&D is profit-driven, and a lot of that is funded by industry (ie, company) money.  An example of this would be Intel spending money on researching ways to build better computer chips.  However, much of our R&D is not necessarily profit-driven even though it is still necessary and useful.  Examples of this would include climate science, theoretical physics, basic cell biology research, etc. We called this basic research or fundamental research, because it is geared toward understanding the fundamental science behind some process or problem.  This kind of research is important, because many of the new discoveries made in basic research lead to future applied research (ie, developing a new technology, etc.).  

Before we go any further with basic and applied research, though, let's break down the US R&D spending into fields.  You can see from the graph below that the US federal R&D budget is very defense-heavy:

That peak right after 2008 in  health research is partly the economic stimulus package; that's now gone away, so we've dropped back to pre-stimulus levels (actually less because of the sequestration).  Note how much less we spend on health R&D vs defense R&D--less than half.  I'm not saying that we shouldn't spend on defense, but cancer or heart disease alone kills a lot more people in this country than terrorism or war does.  Many people would argue that we should think about focusing on health a little bit more....   

Let's take a look at just a few more graphs and break things down even further in terms of basic and applied research.  Below, we see that US basic science research is predominately performed at universities, but some also gets done in industry or at federal agencies like the NIH:    

You can see that this basic research is paid for largely by the federal government:

And as you would expect, because most of what universities do is basic research and because most basic research is federally funded, the major source of funding for university research is the federal government:

Applied research, in contrast, is still mostly funded by industry:

And most of the applied research is done by companies themselves:

When we look at federal R&D spending by type of research below, we can see that much of the recent funding increases in the R&D budget have been for development.  Much less increase has gone into basic or even applied research:

When you graph this another way to look at the percent increase in funding by area, you can see that basic research funding in particular has not increased much at all over the past decade: 

We appear to be shortchanging basic and applied research and in favor of development.  However, all three of these areas are critical.

The International Council for Science position statement on "The value of basic scientific research" states that:
Basic and applied science are a continuum.  They are inter-dependent.  The integration of basic and applied research is crucial to problem-solving, innovation, and product development.    

If federal government research funding drops or does not increase, industry will still drive a lot of R&D, but it will be mostly applied research and development.  The field that relies most on federal funding is basic research depends on federal government funding.  Historically, the government has been excellent at supporting this, but we need to keep it up.  Now is not the time to quit.  This basic research is what leads to discoveries that create new avenues of applied research and thus helps to drive economic growth.  In a 1988 editorial, Irwin W. Sherman described basic and applied research as "two sides of a coin" and gave a very good description of both.  You can read that editorial here (the link opens a PDF).  In order for science and technology to advance, you need both avenues of research.             

Here are my take-away messages:
  • Basic science research drives applied R&D.  Basic science creates the new discoveries that then get translated into applied research and development.  
  • From the above graphs, we can see that the US is the world leader in R&D spending, but other countries are increasing spending on R&D faster than the US is.  US increases are not keeping pace with increases in other countries, particularly China.    
  • Also from the graphs, we can see that while the US spending increases have been small, the increases have been even smaller (or non-existent) in terms of basic science research.  
  • Not investing enough in basic research to come up with new discoveries and new technologies is going to short-change our future.       

Other sources and further reading
  • C. dos Remedios.  "The Value of Fundamental Research.  International Union for Pure and Applied Biophysics.  2006.  Available here.  
  • Federation of American Societies for Experimental Biology (FASEB) webpage on Economic Benefits of Biomedical Research (Available here) and Benefits of Basic Research (Available here). 
  • International Council for Science.  Position Statement on "The value of basic scientific research."  2004.  Available here
  • C. Llewellyn Smith.  "What's the Use of Basic Science."  Joint Institute for Nuclear Research.  Available here.
  • NIH National Institute for General Medical Sciences.  "Curiousity Creates Cures: The Value and Impact of Basic Research."  2012.  Available here.
  • A.J. Salter and B.R. Martin.  "The economic benefits of publicly funded basic research: a critical review."  Research Policy.  2001.  30:509-532. 
  • J. Wapner.  "The False Distinction Between Basic and Applied Science."  7-24-2011.  Available here


  1. so... the money they get does or doesn't come from our taxes???

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