The Economic Value of the Space Program

[phk]

The Economic Value of the Space Program (corrected version)
July 20th, 2009

Sigh. I had to retract and redo the original post, in light of some absolutely correct comments. The original version of the post is at the bottom, so you can see the problems. I clearly overstated my case there. Sorry about that--MM

Yes, let us celebrate the 40th anniversary of the Apollo moon landing, an amazing human achievement.

But even as it lifts our spirits, let us ask a different, more mundane question: What was the long-term economic value of the spending on the Apollo program? The amounts spent were enormous. Consider this: From 1962 to 1972, when the last Apollo mission landed on the moon, space-related activities got 59% of nondefense government R&D spending. That was $176 billion (inflation-adjusted in 2009 dollars).

What did we get in return? The space program was one of the original big customers for integrated circuits in their infancy, helping give them a big boost. And here’s a long list of other spinoffs from the space program.

However, there are two points to remember. First, one key spinoff that we did not get was a viable private manned space industry, at least so far. One is developing, but it’s not there yet. And the government manned space program has limped along since the Apollo program.

The other problem is that while we were spending at a rapid pace on space travel, we didn't put money into R&D in other key areas like energy and natural resources. (This omission had real consequences during the energy crisis of the 1970s).

President Kennedy acknowledged as much in his 1961 speech where he committed the U.S. to the goal of "landing a man on the moon." Kennedy said:

    This decision demands a major national commitment of scientific and technical manpower, material and facilities, and the possibility of their diversion from other important activities where they are already thinly spread.

Let me be clear here—I don't think the moon landing was a bad idea. To the contrary--I'm glad we did it. And yes, the money spent on the moon program helped stimulate innovation.

But as an economist, I have to wonder whether the same R&D money, spent in other ways, could have had a bigger impact. That's a hypothetical question that we'll never know the answer to. But it would sure have been nice if the investment in the Apollo program had led to a viable private manned space industry in fewer than 40 years.

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