year delay in becoming an active innovator over the 20th century suggests, at a standard 10%
discount rate, a compound 45-55% decline in the value to becoming a scientist. This kind of
selection effect may not only slow scientific progress but also slow economic growth, should the
positive spillovers that follow from idea creation (see Section III) not feature in other white
collar careers. The recent finance boom, drawing talented undergraduates into quickly attained,
high wage streams, may make this comparison particularly acute.
A. “Natural” Compensating Mechanisms
Before considering policy mechanisms that can confront this selection issue and
encourage entry into science, it is important to evaluate two possible compensating mechanisms
that are naturally built into the economy’s growth path. The first mechanism is increasing life
expectancy. As lifespan increases, the period over which a scientist can enjoy the fruits of their
education may extend, raising the value V of being educated. This effect might seem to
encourage entry into high-training scientific careers. However, discounting suggests such
compensation may be small. In particular, when making career choices in the early life-cycle, an
extra year of earnings, prizes, or status 50 years in the future may have little value in comparison
to what is immediately foregone. For example, at a discount rate of 10%, an additional year of
schooling requires a 10% increase in V to compensate. But an additional year of life 50 years in
the future would increase V only incidentally from today’s perspective - in fact, by only one half
of one percent. Moreover, the increase in life-expectancy is presumably common across types of
careers, so this “natural” life-expectancy mechanism has little if any inherent capacity to solve
the selection issues above and especially the issue that talented individuals avoid science
entirely.
The second compensating mechanism follows naturally as markets expand in size. The
value of a patent will tend to increase linearly in the number of people around to use it, and
increase similarly as per-capita income rises nationally and globally, raising consumers’
willingness to pay. From this perspective, one can assume that, fixing the size of the
technological jump embedded in ideas, the market value of a new idea is greater today than in
the past. This market size compensation can be substantial and may help explain why we
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