Rewarding a good idea

October 16, 2008

In many settings, prizes can be an efficient way of encouraging new breakthroughs. (For a paper exploring the use of prizes to encourage technological innovation, see here.) I was therefore particularly encouraged to see that the X-Prize Foundation and Wellpoint have created a competitionwith a prize of at least $10 million for innovative approaches to addressing health care problems and improving the sector's efficiency -- which is a key issue for our long-term fiscal and economic future. Wellpoint has committed to testing the ideas in its state markets. Details about the competition will be finalized in early 2009. CBO will be watching the results closely.