Summary of NIST Impact Study Results

NIST Economic Impact Studies

Within the DOC, NIST has had a long history of assessing the economic impact of standards and related technologies transferred from its research and standards programs. These studies have focused on assessing the economic impacts of test methods, calibration services, reference materials, and other services developed by NIST.

Between 2000 and 2011, sixteen microeconomic studies were performed that assessed technologies transferred to nine different industries.  Each of these studies measured economic impact in terms of the net benefits society experienced as a result of NIST’s technology transfer activities.  Measures of net benefits include net present value (NPV), social rate of return (SRR), and benefits to cost ratio (BCR).  NPV is the inflation adjusted value of net benefits (benefits-costs) discounted over the course of the study period.  A positive NPV indicates that the mechanism being assessed yields greater benefits than the cost to provide it. SRR is the interest rate that reduces the NPV to zero.  The SRR is similar to the internal rate of return metric commonly used to judge the worthiness of investment projects. The modifier “social” indicates that the value of this performance metric accounts for the benefits and costs that accrue to all beneficiaries, not just the project investors.  The BCR is the ratio of the net present value of benefits to the net present value of costs. A positive BCR value indicates the number of dollars in benefits that have resulted from the technology transfer activity for each of the dollars invested, adjusted for inflation.

For example, as shown in the table below, in 2000 a study was made to assess the economic impact of NIST’s standard reference materials (SRMs) used in the production of fossil fuels (Economic Impact of Standard Reference Materials for Sulfur in Fossil Fuels).  SRMs are quality assurance materials that are used, among other things, to evaluate measurement accuracy and to provide compatibility of measurement data.  They play a key role in manufacturing by helping users verify the accuracy of measurement methods and calibrate measurement systems.  In this example, SRMs are used to provide more accurate sulfur content information for fossil fuels manufactures. Improving the accuracy of content information reduces the likelihood of disputes between sellers and purchasers of fossil fuels, such as coal companies and electric utilities. It also enhances production efficiency for the petroleum industry, resulting in reduced sulfur emissions into the environment.  This study quantified a portion of the economic benefits associated with sulfur SRMs. Included in the measures of economic benefits were improvements in product quality, production efficiency, and reductions in transaction costs and sulfur dioxide emissions to the environment. In addition, the study identified and qualitatively described the impact of NIST SRMs on other less tangible areas, such as research and development programs.

This study estimated that industry significantly benefited from the development and transfer of NIST’s sulfur SRMs.  According to the measures of benefits and costs analyzed, NIST’s sulfur SRMs yielded a NPV of $409 million in 1998 dollars, which equates to a SRR of 1056%.  The BCR of 113 indicates that for each dollar NIST spent on developing sulfur SRMs, $113 in net benefits accrued to those who used the SRMs in the manufacturing of fossil fuels.

NIST Economic Impact Studies (2000 to 2011)

Thirteen of the studies presented in the table estimated SRR. The SRR values for these studies ranged from a low of 27% to a high of 1056%.  The mean value is 254%, but given the standard deviation for this sample (327%), the median value of 154% is more representative of the typical study. Sixteen studies calculated BCR. The BCR values ranged from a low of 4 to a high of 249.  The mean value is 46 but again, given the standard deviation for the sample (69) the median value of 9 is more representative of the typical study.  The median value of 9 indicates that for a typical study on this list each dollar NIST spent, $9 in benefits were created.  Note that given the data presented here, the NPV measures from different studies cannot be aggregated into one value because different base years are used to calculate benefits and costs.

	SRR	BCR
Numbers of Studies Reporting	13	16
Min	27%	4
Max	1056%	249
Mean	254%	46
Std Dev	327%	69
Median	154%	9