Cost benefit and public policy issues

The paper reviews the work done and conclusions reached on resource allocation to R&D in the public sector in the last twenty years, and examines what changes have been made in the field of R&D assessment. The paper is based mainly on the author’s experience with the UK government’s Programmes Analysis Unit which was set up in the early 1960s. The Unit’s main remit was to examine and disseminate techniques by the use of which the benefit to the nation from possible R&D strategies, programmes and projects might be calculated. It was also called in to help review policy and carry out long-range forecasting. In the course of its existence-it was wound up in 1977-it analysed many new techniques of analysis which have now passed into common use and took part in studies to support decisions at all levels from the macro-economic sector down to the individual project. The author lists the benefits derivable from such analyses-helping to identify objectives, assemble total programmes, evaluate efficiency of technological transfer, carry out technology assessment and so on. But he warns of their limitations. As for the present day, the author is unhappy about the importance given by the UK Government to the market as a test of value in decision-making about R&D, in so far as it leads to neglect of long-term issues and relies on uncertain causal relationships among critical inputs. Cost-benefit is adequate for dealing with short-term, small-scale projects. For larger projects with controversial long-term implications he advocates broader-based techniques such as multi-attribute analysis, which bring the interests of many parties into the judgment and take into account considerations such as the environment, finite resources and social impact, which are difficult if not impossible to cast in cost/benefit terms.