Exploring the Unknown - NASA's History Office

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SPACE AS AN INVESTMENT IN ECONOMIC GROWTH
These studies had their critics. The most pointed one was the report of the General
Accounting Office (GAO), which examined the Chase Econometrics study of 1976.
[III-7] The GAO analysis was sympathetic to the idea that NASA had generated technological
returns, but it did not accept the Chase study metrics, nor did the GAO reviewers
view the methodology of the Chase study as valid. They were probably correct because the
Chase follow-on study of 1980 could not replicate the results of the 1976 study. There were
a number of technical economic reasons for the lack of confidence in the Chase results.
Perhaps the most telling reason was the belief by Chase that NASA needed to have “good”
results from the study. Thus, Chase ran about sixty different simulations of the economy
under different assumptions and chose the best results to present in the report. 11 The
study did result in good public relations and press releases, but it was not well received by
the professional economics community. Despite the critics’ assessments, the results
became benchmark figures that have been quoted time and again in speeches by NASA
officials and in various testimony and publications.
During the mid-1970s, NASA also commissioned studies to attempt to develop measures
of the aggregate benefits from specific successful technologies that the agency had
supported. These studies were funded by the NASA headquarters office responsible for
technology utilization and transfer, and they applied a case study approach to measuring
benefits. By focusing on successful innovations, the selection of technologies was not random,
nor did it adequately measure overall benefits to NASA. 12 These studies had the
advantage of using more standard economic tools and of identifying concrete cases rather
than abstract measures of gross domestic product. They were, in short, more easily understood
than the macroeconomic approaches used by the Midwest Research Institute and
Chase Econometrics.
In 1972, the Denver Research Institute studied NASA contributions to specific fields
of technology. [III-8] It found that the major significance of NASA contributions was in
causing technology advances in those fields to occur at an earlier time than they would
have without NASA funding and support, that more than one-half of the technologies
were employed in the aerospace and defense sectors, and that the technologies had only
a moderate economic impact and relatively low scientific and social impacts. There was
wide variation in the quantitative estimates from technology field to field. The study was
based on interviews with the NASA engineers and scientists responsible for the innovations.
Although the methodology was subjective and the sample biased because the data
were collected from NASA officials, the general policy results are consistent with later
studies that used more sophisticated methodologies.
In 1976, a study performed by Mathematica analyzed the contribution of NASA to
only four technologies and found nearly $7 billion of economic impacts. [III-9] The
$7 billion was more than the NASA budget of 1976, and the results of this study were used
in connection with the Chase and Midwest Research Institute results to suggest the leverage
that NASA funds have on the economy. This study focused on gas turbines, cryogenics,
integrated circuits, and NASTRAN (a software program). The primary NASA benefits
measured were the “speedup” of bringing these technologies into the marketplace, not
11. This conclusion was related to the author in a conversation with Michael Evans, president of Chase
Econometrics, several years after the study was completed. It is backed up by the research results of the 1980 follow-on
study, which could not replicate the results for two reasons: (1) the calculation of the actual variables was
not well documented in the original study, and the values assigned to some of the variables could not be verified;
and (2) the statistical tests showed that the returns to NASA were not significantly different from zero. The
second reason could also be explained by the very small percentage coming from the NASA budget of the R&D
expenditures in the economy.
12. In fact, by overlooking unsuccessful technologies, the cost side of these benefit-cost studies may have
been significantly understated.