NIST Releases Guide for Economic Impact Analysis of R&D

Gaining an understanding of the real and potential economic impact of government investments in research and development (R&D) has suffered for decades from a lack of rigorous but broadly applicable methodologies for the assessment. To advance the field toward a more appropriate degree of uniformity, the National Institute of Standards and Technology (NIST) recently released a primer on economic impact analysis of government R&D programs.

Methods for Assessing the Economic Impacts of Government R&D, written by NIST Senior Economist Gregory Tassey, touches on all aspects from metrics to methodology to reasons why these studies are imperative. Tassey also presents guidelines for interpreting the qualitative and quantitative results of various approaches.

Increasing global competition and increased efforts in the 1990s toward greater efficiency in government has boosted pressure on federal agencies to conduct economic impact assessments, according to the report. These pressures are relatively new and the majority of agencies have not obtained the internal means to select proper metrics, data sources and analytical methods. Agencies also have struggled in selecting contractors outside of the agency with the skills necessary to perform such assessments, the report argues. As a result, the need for proper impact assessment is often lost, as most R&D agencies are managed by technically trained individuals unfamiliar with tools for economic assessment and uncomfortable using and interpreting data produced by a field of study in which they are not trained.

Tassey presents three reasons for conducting economic impact studies of government research programs:

• A collection of these studies will provide a database containing reports concerning the nature and size of the economic impacts of supported research.
• These studies can provide input into reassessments and better articulations of an R&D agency’s role. And,
• More and better data is needed to improve management of government research programs.

With so many different programs needing evaluation, a single manual is difficult to produce as each program may require a different method or metric, Tassey states. However, certain methodological elements are common to all economic impact assessments, including:

• Decision criteria for selecting programs/projects for study;
• Development of impact scenarios and subsequent metric construction;
• Development of impact hypotheses;
• Identification of primary and secondary data sources;
• Design and conduct of data collection;
• Analysis of the data; and,
• Compilation of the analysis into a final report that effectively communicates impact information to the intended audiences.

Methods for Assessing the Economic Impacts of Government R&D provides overall guidelines for assessing the economic impacts of technology research programs. It also provides a review of alternative analytical frameworks, data collection strategies, metrics and impact measures. The report can be downloaded at: http://www.nist.gov/director/prog-ofc/report03-1.pdf