The economics of the space station

Abstract

Space exploration and development are naturally conducted on the cutting edge of science and technology. Such efforts inevitably involve decisions made in the presence of extensive uncertainty. For some projects, particularly those which involve the creation and maintenance of an infrastructure, the emphasis is switching from specific engineering goals (for example, a man on the moon by 1969) to more diffuse, continuing, multiple-dimensional goals. This is especially true of the space station, which is envisioned as both a vital link in the exploration of the planets and a major facility for the advancement of commercial efforts in space. The combination of uncertainty and diffuse, long-term goals fundamentally alters the viability and validity of traditional economic and engineering approaches to the management of large public research and development projects. It has become popular to call into question the recent management of continuing projects like the space shuttle or major new weapons systems. We must, however, recognize that cost overruns, gold plating and other forms of apparent mismanagement are usually not the result of individual venality and misbehavior but only the natural outcomes of the existing organizational rules of the game. Just as the performance of an engineering design is guided by the laws of physics, the performance of an organizational design is guided by the laws of behavior. This fact means that to improve performance we cannot simply add more or better manpower; rather, we must look for new organizational solutions. There are many ad hoc opinions about how to do this; what I propose is a more systematic, scientific approach. This paper examines some of the economic and management issues which must be addressed if the space station is to effectively and efficiently pursue the myriad goals that have been chosen for it. I characterize and evaluate in a somewhat stylized fashion three possible policies: an "engineering" approach, an "economics" approach, and a systematic custom design approach. I will use the space station as an example to highlight some of the major economic issues facing large-scale multipurpose research and development efforts, the analytical capabilities we now have to address these issues, and the (non-engineering) research that needs to be done to advance the successful long-term development of space.

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