Costs and Benefits of Medical Research: A Case Study of Poliomyelitis
The Journal of Political Economy, Vol. 79, No. 3, pp. 527-544, May-June 1971
19 Pages Posted: 29 May 2011
Date Written: May 1, 1971
Abstract
The paper provides estimates of (1) research expenditures on poliomyelitis, (2) several forms of productivity benefits from applying the knowledge generated by the research, and (3) the costs of applying that knowledge. Internal rates of return are computed under a variety of assumptions, with results generally between 4 and 14 percent. The inter-relatedness of research with procedures for applying the research findings is investigated; in the case of polio, the rate of return on research is found to be heavily influenced by the costs of application. Finally, a discussion is included of the likely allocative efficiency of private-market behavior when a collective-consumption good, such as research knowledge, requires the use of an individual-consumption good, such as a vaccination, for its application.
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