On Optimal Social Investment in the Sciences and Humanities

摘要

This essay examines the optimization of public, non-profit investment in the natural and social sciences and humanities, given that the individual project outcomes are spread over time and are uncertain. The more distant the results, the greater is the uncertainty, as measured by the success-or-failure variance. Diversification into many simultaneous projects reduces but does not eliminate this risk. By contrast, in a deterministic, no-risk model, there is no way to optimize undertakings in pure science other than to accept social or political consensus. The commonly-used planners' discount rate of zero is shown in the Appendix to have the additional property of leading to the Golden Rule.