U.S. foundation has been established to award prizes for private travel to space, automotive fuel economy, genetic sequencing, and other objectives. Legislation is pending in Congress to authorize the Department of Energy (DOE) to award prizes for advances in hydrogen fuel development. And 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 to establish an inducement prize program and to engage the National Academy of Sciences in its design.

The committee believes that an ambitious program of innovation inducement prize contests will be a sound investment in strengthening the infrastructure for U.S. innovation. Experimental in its early stages, the program should be carried out in close association with the academic community, scientific and technical societies, industry organizations, venture capitalists, and others. The legislative mandate nevertheless poses a substantial challenge to NSF. The agency sees itself and is seen as working primarily through the competitive award of grants to academic scientists and engineers for self-initiated proposals about how to advance basic knowledge of natural and social phenomena. It has limited experience in supporting innovations intended to solve societal problems and no experience in administering innovation prize contests. Provided, as Congress stipulated, that the objective of promoting innovation is interpreted broadly to focus on high risk/high payoff research projects with ambitious scientific and technological objectives rather than narrowly on commercial or near-commercial innovations, the committee recommends that NSF embrace this challenge as an opportunity both to advance science and engineering and to learn a great deal more than we now know about what may prove to be a valuable mode of support for research and innovation.


The committee recommends that the agency take an experimental approach to implementing its congressional directive to award such prizes, especially during the program’s formative period. By an experimental program we do not mean that prizewinning would necessarily entail use of experimental methods nor that the program would be set up as a rigorous scientific experiment with appropriate controls. Instead, the program should be conducted with careful attention to evaluation, measurement, and use of feedback about the program itself. There is much to learn about how to determine the appropriate goals for inducement prizes, set the terms and conditions under which prize contestants participate and winners are recognized, establish an appropriate time frame for award of a prize, and decide whether and how to partner with or

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