December 2000 Fraser Forum:
Economic Intelligence Briefs
Government Failure at the North Pole
Explorations for the purpose of scientific and geographical discovery, such as space missions, might seem an example of an activity naturally suited for government provision. Yet the history of exploration is marked by both public and private endeavours. One focus of such expeditions in the nineteenth and early twentieth centuries, was the arctic, with scores of explorations launched by countries throughout the world. Given the rich historical data available on these endeavours, economist Jonathan Karpoff decided to assess whether government-financed arctic expeditions had different characteristics than privately-funded ones.
They did, and markedly so. For the 92 distinct arctic explorations during the period 1818-1909, Karpoff analyzed whether the source of financing influenced a variety of measurable outcomes. He found that publicly-funded expeditions had significantly worse outcomes than privately-financed ones. In particular, public expeditions had higher rates of crew deaths and of ship losses, as well as more common incidence of scurvy. These shortcomings arose despite the fact that public expeditions were more abundantly financed, using more ships and larger crews. Moreover, there was no significant difference in the rate of major discoveries by publicly- versus privately-funded explorers. Because of this, the efficiency of private explorations—measured as the rate of major discoveries relative to crew size—exceeded that for the public ones.
The reason for the superiority of private arctic exploration, Karpoff found, was superiority in incentives and organization. Specifically, while private expeditions were actually led by their organizers in 78 percent of cases, this was only true in 27 percent of government-funded endeavours. According to Karpoff, "Because they did not actually go on the trips, the organizers of public expeditions faced few of the negative consequences of poor planning or erroneous theories," among which were misguided views on proper clothing, scurvy prevention, optimal travel mode, and the existence of a fictitious, ice-free "Open Polar Sea."
Source: Jonathan M. Karpoff, "Public Versus Private Initiative in Arctic Exploration: The Effects of Incentives and Organizational Structure," Independent Institute, Working Paper no. 23 (2000).
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