INNOVATION INDUCEMENT PRIZES
AT THE NATIONAL SCIENCE FOUNDATION
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
www.nap.edu
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract No. OIA-0629535 between the National Academies and the National Science Foundation. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the agency that provided support for the project.
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COMMITTEE ON THE DESIGN ON AN NSF INNOVATION PRIZE
MARK B. MYERS, Chair, Senior Vice President,
Science and Technology, Xerox Corporation (retired)
ERICH BLOCH, Principal,
The Washington Advisory Group
STUART I. FELDMAN, Vice President,
IBM
MERTON C. FLEMINGS, Professor of Materials Science and Engineering, Director,
Lemelson-MIT Program, Massachusetts Institute of Technology
CLAIRE GMACHL, Assistant Professor of Electrical Engineering and Director,
Mid-InfraRed Technologies for Health Care (MIRTHE), Princeton University
THOMAS A. KALIL, Special Assistant to the Chancellor for Science and Technology University of California,
Berkeley
DAVIS MASTEN, Prinicpal,
Cheskin Associates Inc.
KAREN E. NELSON, Investigator,
The Institute for Genomic Research (TIGR)
RICHARD G. NEWELL, Senior Fellow,
Resources for the Future
PETER M. RENTZEPIS, Presidential Chair and Professor of Chemistry,
School of Physical Sciences, University of California, Irvine
SUZANNE SCOTCHMER, Professor of Economics and Public Policy,
University of California, Berkeley
MARGARET STEINBUGLER, Manager,
Transportation Fuel Cell Product Development, UTC Fuel Cells
Staff
STEPHEN A. MERRILL, Study Director
CHRISTOPHER T. HILL, Consultant,
George Mason University
PROCTOR REID, Director,
Program Office, National Academy of Engineering
BENJAMIN ROBERTS, Christine Mirzayan Science and Technology Policy Graduate Fellow, Summer 2006
MAHENDRA SHUNMOOGAM, Senior Program Assistant
BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY
DALE W. JORGENSON, Chair,
Samuel W. Morris University
Professor,
Harvard University
TIMOTHY F. BRESNAHAN, Landau Professor in Technology and the Economy,
Stanford University
LEWIS W. COLEMAN, President,
DreamWorks Animation
KENNETH S. FLAMM, Dean Rusk Chair in International Affairs,
Lyndon B. Johnson School of Public Affairs, University of Texas, Austin
MARY L. GOOD, Donaghey University Professor and Dean Donaghey College of Information Science and Systems Engineering (DCISSE),
University of Arkansas, Little Rock
AMO HOUGHTON, Former Member of Congress
DAVID T. MORGENTHALER, Founding Partner,
Morgenthaler Ventures
JOSEPH P. NEWHOUSE, John D. MacArthur Professor of Health Policy Management Harvard Medical School,
Harvard University
EDWARD E. PENHOET, President,
Gordon and Betty Moore Foundation
ARATI PRABHAKAR, General Partner,
U. S. Venture Partners
WILLIAM J. RADUCHEL, Independent Director and Investor
JACK W. SCHULER, Chairman,
Ventana Medical Systems Inc.
SUZANNE SCOTCHMER, Professor of Economics and Public Policy,
University of California, Berkeley
Staff
STEPHEN A. MERRILL, Executive Director
CHARLES W. WESSNER, Associate Director
SUJAI J. SHIVAKUMAR, Senior Program Officer
DAVID E. DIERKSHEIDE, Program Officer
CYNTHIA GETNER, Financial Associate
JEFFREY C. McCULLOUGH, Program Associate
MAHENDRA SHUNMOOGAM, Senior Program Assistant
Preface and Acknowledgments
The FY 2006 Science, State, Justice, Commerce, and Related Agencies Appropriations Act (Public Law 109-108) directed the National Science Foundation (NSF) to use available funds for “innovation inducement prizes.” Following guidance in the accompanying House Report 109-118, the agency in June 2006 arranged with the National Academies’ Science, Technology, and Economic Policy (STEP) Board to conduct a fast-track study with the following objectives:
[P]ropose a plan for administering prizes to individuals or teams that achieve novel solutions to specified social or research needs or capitalize on recognized research opportunities. Evaluate the goals that could be served by such a competition. Propose areas of basic or applied research that would be suitable for a prize competition. Address other issues of design including financial award, rules framework, administration, and unintended consequences that could facilitate or hinder achieving the goals.
To address this task the National Academies assembled a committee composed of experts in private sector technology management, publicly sponsored research, public policy and administration, marketing, and economics. The two economists on the panel have had a long-standing interest in the strengths and limitations of the prize mechanism and contributed to the academic literature on the subject. The committee included experts in several scientific and engineering disciplines, including molecular biology, materials, computer science and electrical engineering, and optics. Most of these investigators are or have been beneficiaries of
NSF research support at one time or another. A former director of the NSF and a former White House National Economic Council official also served on the panel. Both played key roles in a 1999 National Academy of Engineering (NAE) workshop that led to an important endorsement of prizes as an innovation policy tool, the former as chair of the steering committee, the latter in commissioning the activity. The committee was fortunate to have the advice and drafting assistance of Christopher T. Hill, George Mason University professor of technology and public policy, and Proctor Reid, director of the NAE Program Office. We are grateful to all of these contributors to this report.
In the three and one-half months between its appointment and the submission of its report to external review the committee held two two-day meetings, one incorporating a public session with presentations by the following: Arden L. Bement Jr., director, NSF; Ken Davidian, director, NASA Centennial Challenges; Ben Shelef, Spaceward Foundation; and Peter Diamandis, president, X-Prize Foundation.
Project staff interviewed key staff members of the relevant appropriations and authorization committees and a number of other people with practical experience with prizes and familiarity with NSF’s missions, traditions, and culture. The academic literature on prizes was, of course, thoroughly reviewed. Nevertheless, because of the limited empirical base for conclusions about what circumstances are best suited for the use of prize contests to promote innovation, the committee had to rely on collective judgments for many of its conclusions and recommendations.
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the process.
We wish to thank the following individuals for their review of this report: MRC Greenwood, University of California, Santa Cruz; Rebecca Henderson, Massachusetts Institute of Technology; Frank Huband, American Society for Engineering Education; Dean Kamen, DEKA Research & Development Corporation; Paul Kaminski, Technovation Inc.; Ron Kurjanowicz, DARPA; and Patrick Windham, Independent Consultant.
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Mark B. Myers, Chair
Stephen A. Merrill, Study Director