The Allocation of Publicly-Funded Biomedical Research

CES No. 140

29 Pages Posted: 9 Dec 1997

See all articles by Frank R. Lichtenberg

Frank R. Lichtenberg

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Date Written: September 1997


We develop a simple theoretical model of the allocation of public biomedical research expenditure, and present some empirical evidence about the determinants of this allocation. The structure of expenditure should depend upon the relative costs as well as the relative benefits of different kinds of research. Analysts of technical change typically have data on neither of these, but the measures of disease burden we use are indicative of the benefit of achieving advances against different diseases. We calculate distributions of government-funded biomedical research expenditure, by disease, from records of all re-search projects supported by the United States Public Health Service; to obtain a reasonably complete accounting of disease burden, we utilize data on both the dying (from the Vital Statistics-Mortality Detail file) and the living (from the National Health Interview Survey). We find a very strong positive relationship across diseases between total life-years lost before age 65 and public R&D expenditure. But the amount of publicly-funded research on a disease decreases with the share of life-years before age 65 lost to the disease that are lost by non-whites, perhaps because lack of scientific knowledge is a less important cause of premature mortality among non-whites than it is among whites. The number of research grants mentioning a chronic condition is completely uncorrelated with the number of people with the condition but very strongly positively related to the number of people whose activities are limited by that condition. There tends to be more research about chronic conditions that are prevalent among people living in low-income households, and that are prevalent among the young (under age 18) and the old (above age 75).

JEL Classification: I18

Suggested Citation

Lichtenberg, Frank R., The Allocation of Publicly-Funded Biomedical Research (September 1997). CES No. 140, Available at SSRN: or

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