Pricing Externalities to Balance Public Risks and Benefits of Research

How should scientific funders evaluate research with public health risks? Some risky work is valuable, but accepting too much
risk may be ethically neglectful. Recent controversy over H5N1 influenza experiments has highlighted the difficulty of this
problem. Advocates of the research claim the work is needed to understand pandemics, while opponents claim that accidents or
misuse could release the very pandemic the work is meant to prevent. In an attempt to resolve the debate, the US government
sponsored an independent evaluation that successfully produced a quantitative estimate of the risks involved, but only a
qualitative estimate of the benefits. Given the difficulties of this ‘‘apples-to-oranges’’ risk-benefit analysis, what is the best way
forward? Here we outline a general approach for balancing risks and benefits of research with public risks. Instead of directly
comparing risks and benefits, our approach requires only an estimate of risk, which is then translated into a financial price. This
estimate can be obtained either through a centrally commissioned risk assessment or by mandating liability insurance, which
allows private markets to estimate the financial burden of risky research. The resulting price can then be included in the cost of the
research, enabling funders to evaluate grants as usual—comparing the scientific merits of a project against its full cost to society.
This approach has the advantage of aligning incentives by assigning costs to those responsible for risks. It also keeps scientific
funding decisions in the hands of scientists, while involving the public on questions of values and risk experts on risk evaluation.

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