The Economics of Science
Science commands the attention of economists for at least three reasons. First, science is a source of growth. The lags between research and growth may be long, but the economic impact of science is indisputable. The evidence is quite tangible. Advances in information technology, for example, have contributed significantly to growth in the service sector in recent years. Medical research has done a considerable amount to extend work and life expectancy, first with the introduction of antibiotics and more recently with the introduction of new classes of drugs and medical devices.
Second, scientific research has properties of a public good. It is not depleted when shared and once it is made public others cannot easily be excluded from it. As economists, we have special concerns regarding the failure of economies to produce public goods efficiently. A major reason for studying science is that a reward system has evolved in science that goes a long way toward solving the appropriability problem associated with the production of a public good.
Third, the public nature of research and the spillovers inherent in such a system are fundamental to the concept of endogenous growth theory developed by Paul Romer and others and is now a cornerstone of growth theory in economics.