Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/28314
Appears in Collections:Faculty of Health Sciences and Sport Journal Articles
Peer Review Status: Refereed
Title: Economic Growth and the Harmful Effects of Student Loan Debt on Biomedical Research
Author(s): Ferretti, Fabrizio
McIntosh, Bryan
Jones, Simon
Keywords: Biomedical researchers
Economic growth
Higher education cost
Student loan debt
Equality of opportunity
Issue Date: 31-Dec-2015
Date Deposited: 28-Nov-2018
Citation: Ferretti F, McIntosh B & Jones S (2015) Economic Growth and the Harmful Effects of Student Loan Debt on Biomedical Research. Economic Modelling, 49, pp. 308-313. https://doi.org/10.1016/j.econmod.2015.05.004
Abstract: Modern theories of economic growth emphasize the role of research and development (R&D) activities in determining a society's standard of living. In some advanced economies, however, higher education costs and the level of indebtedness among graduates have increased dramatically during recent years.Student loans are evident throughout the Western world, particularly in the United States, and within the biomedical sciences. In this paper the authors develop a basic model of economic growth in order to investigate the effects of biomedical graduates indebtedness on the allocation of human resource in the R&D activities, and thus on the process of economic growth. Using this modified model to understand the consequences of the rising cost in biomedical education, we derive a 'science-growth curve' (a relation between the share of pure researcher and the economy rate of growth), and we find two possible effects of biomedical student indebtedness on economic growth: specifically, a composition effect and a productivity effect. First, we outline the Romer's classical growth model, and we apply it to a 'biomedical' knowledge-based economy, and second, the model is developed by factoring the difference between pure and applied biomedical research. The 'biomedical science sector' is one of the key pillars of modern knowledge-based economy. The costs of higher education in biomedical sciences and the graduates level of indebtedness represent, not only a great problem of equality of opportunity, but also a serious threat to future prosperity of the advanced economies.
DOI Link: 10.1016/j.econmod.2015.05.004
Rights: Published under a Creative commons CC BY NC ND 4.0 (https://creativecommons.org/licenses/by-nc-nd/4.0/)
Licence URL(s): http://creativecommons.org/licenses/by-nc-nd/4.0/

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Rising bio-medical graduate debt: brain drain from pure to applied research and economic impact

What is it about?

Advanced economies rely on technological progress to ensure a high standard of living. Researchers’ ideas and activities drive technological progress. The bio-medical sciences sector now contributes significantly to economic growth worldwide. However, education costs and thus student indebtedness are rising, particularly in the United States. This study examines two related economic issues: how the career choice of bio-medical research professionals is impacted by the student loans they take and how this choice, limited in this study to a choice between academic or non-profit (curiosity-driven) research and private-sector or for-profit (practical-driven) research, affects the prosperity of advanced economies.

Why is it important?

The study suggests that the increased indebtedness of biomedical researchers strongly incentivizes their pursuit of more lucrative research opportunities at for-profit, private-sector institutions and that the subsequent decrease in curiosity-driven research reduces the rate of technological and scientific progress. This brain drain would also result in less productive researchers. This study is the first to theoretically analyze how student loan indebtedness affects economic growth. By highlighting that the rising indebtedness could affect R&D activities, this study reveals the potential negative impact on the entire economy.

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Fabrizio Ferretti



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