With NASA preparing to outsource much of its space program to the private sector, some may remember the 2004 flight of SpaceShipOne, the first privately funded and flown craft to reach outer space. Far from being the product of a government research grant, this project grew out of the privately funded Ansari X Prize, which gave $10 million to the first team to reach space. Given all the technological problems in the public consciousness, future X Prizes may serve as a viable alternative to government funding.
In a recent interview, X Prize foundation founder and CEO Peter Diamandis announced that the group will be looking at new problems and under-researched areas that are worthy of awards for the first team that has a major breakthrough. For example, the areas of artificially intelligent physicians and mapping of the ocean floor are high priorities on the foundation’s list. There are already X Prizes for teams that can build a super-efficient car, put a robotic probe on the moon, and develop a device to sequence human genomes at unprecedented speeds.
The X Prizes are based on awards given for technological feats in the early part of last century – for example, Charles Lindbergh’s historic solo transatlantic flight was done to capture a $25,000 prize offered by a French hotelier. It seems as if these prizes do the best work when private firms are on the fence about undertaking new research and projects. By providing additional financial incentives, the prize generates the incentives for private research and development in previously under-explored areas. The added prestige of winning the award, along with the competition among various teams for the prize, further motivate research and development.
The growth and expansion of various X Prizes provide an interesting alternative to government research grants and awards. For such prizes, private investors put up the money, increasing the likelihood that such undertakings are value-added or socially efficient. Private competitions also mitigate public choice incentives to allocate funding on political lines rather than economic ones.
Of course, there are problems too – investors may be solely interested in publicity and not be aware of what research is most urgently needed. To be sure, it does not appear as if private human spaceflight is on par with disease research or environmental cleanup in terms of importance. Furthermore, the X Prize is a unique award, and this model for scientific research does not appear to have widespread traction.
Nonetheless, it will be interesting to see what sort of innovations future X Prizes lead to, and whether private prizes can serve as a viable alternative to government grants in overcoming certain technological challenges.
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