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Allocation of public funds to R&D: a portfolio choice-styled decision model and a biotechnology case study

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Abstract

A decision problem—allocating public research and development (R&D) funding—is faced by a planner who has ambiguous knowledge of welfare effects of the various research areas. We model this as a reverse portfolio choice problem faced by a Bayesian decision-maker. Two elements of the planner’s inferential system are developed: a conditional distribution of welfare ‘returns’ on an allocation, given stated preferences of citizens for the different areas, and a minimum risk criterion for re-allocating these funds, given the performance of a status quo level of funding. A case study of Canadian public research funds expended on various applications of agricultural biotechnology is provided. The decision-making methodology can accommodate a variety of collective expenditure and resource allocation problems.

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Authors and Affiliations

  1. 515 GSB, University of Alberta, Edmonton, AB, T6G 2H1, Canada

    Dmitriy Volinskiy, Michele Veeman & Wiktor Adamowicz

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  1. Dmitriy Volinskiy
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  2. Michele Veeman
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  3. Wiktor Adamowicz
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Correspondence to Dmitriy Volinskiy.

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Funding from Genome Canada, Genome Alberta, Alberta Agriculture Research Institute and the Alberta Crop Industry Development Fund is acknowledged.

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Volinskiy, D., Veeman, M. & Adamowicz, W. Allocation of public funds to R&D: a portfolio choice-styled decision model and a biotechnology case study. Decisions Econ Finan 34, 121–139 (2011). https://doi.org/10.1007/s10203-011-0110-6

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  • DOI: https://doi.org/10.1007/s10203-011-0110-6

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