Exploring the Unknown - NASA's History Office

EXPLORING THE UNKNOWN 391
the development of the technologies themselves. Because this was a study of four cases
and used the more traditional consumer surplus theory of microeconomics, the results
were more readily accepted by the economics community than the results of the macroeconomic
studies of that era.
During the 1980s, NASA economic impact and benefit studies took on the additional
role of creating the climate for large, new NASA programs, such as the space station, not
of simply justifying the overall budget. The combination of the maturity of the space activities
and the national budget deficit began to change the way the nation viewed the space
program. Beyond the space race with the Soviet Union, it became apparent that practical
uses of space and the role of the economic growth and benefits that space could provide
were logical reasons for the government to invest in space and provide additional infrastructure
and incentives for future business and the commercial development of space.
Also, by the late 1980s and the 1990s, with the end of the Cold War, economic benefits
became one of the more important justifications for a continued U.S. presence in space,
at least from the civilian perspective. However, the evidence of economic benefits as measured
by the existing studies was still relatively weak.
To build political support for the space station, several studies were performed to analyze
its expenditures by industry and state. 13 The NASA Alumni League sponsored a study
in 1983 that analyzed expenditures by standard economic industrial categories and by
state. This study also attempted to measure the indirect (or multiplier) benefits by industry
and state. It did not address the more interesting and more challenging task of measuring
technological or productivity benefits. [III-10]
Major contractors also supported the space station with economic benefits analyses.
Rockwell commissioned The WEFA Group (a merger between WEFA and Chase
Econometrics had occurred) to perform a macroeconomic simulation of space station
expenditures. [III-11] This was a more sophisticated attempt at measuring multiplier
effects throughout the national economy, but it also did not take the further steps to analyze
the productivity or technological changes that might be expected to occur with the
space station R&D program.
The most recent study of economic benefits that looked at technology change and
national growth stimulated by NASA was performed by the Midwest Research Institute
(see Document III-6 above) through the National Academy of Public Administration
under contract to NASA. This study repeated the methodology of the 1971 study and was
conducted by the same researchers. It used updated econometric methods and more than
fifteen additional years of data. The results were remarkably similar to the earlier study.
They measured a nine-to-one rate of return to NASA R&D programs. This finding held up
under Midwest Research Institute’s sensitivity analysis. The institute also looked at case
studies on a more qualitative basis. However, NASA never officially released the study,
because the methodology used was still subject to many technical economic qualifications. 14
13. Internally, NASA procurement office reports even generated contracts and expenditures listed by
voting districts as a method of influencing congressmen and senators of the importance of NASA on their constituents.
However, no specific economic multipliers or analyses were performed internally to augment the raw
procurement numbers.
14. An October 5, 1988, internal NASA memorandum from Jim Bain to NASA Associate Administrator
Willis Shapley, which commented on the Midwest Research Institute study, documented the reservations of inhouse
economists as well as some members of the National Academy of Public Administration’s (NAPA) advisory
panel concerning the results of the study. The memo stated: “The NAPA Advisory Panel letter to the NASA
Administrator endorses the conclusion of positive R&D impacts on the economy, but does not reference
endorsement of the study’s conclusions on the magnitude of this impact. Discussions with individual members
of the Advisory Panel have indicated that this was not an oversight, but the direct result of the unwillingness of
some members to publicly endorse those numbers.”