from The Internationalist

Rise of the Prize: Inducing Competition for the Global Good

Pilot Brian Binnie stands atop SpaceShipOne after winning the $10 million Ansari X Prize in Mojave, California October 4, 2004. The prize was awarded after SpaceShipOne became the first commercial spaceship to reach suborbit in two successful attempts. Robert Galbraith/Reuters

August 14, 2018

Pilot Brian Binnie stands atop SpaceShipOne after winning the $10 million Ansari X Prize in Mojave, California October 4, 2004. The prize was awarded after SpaceShipOne became the first commercial spaceship to reach suborbit in two successful attempts. Robert Galbraith/Reuters
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The following is a guest post by Kyle L. Evanoff, research associate in international economics and U.S. foreign policy at the Council on Foreign Relations.

A dash of competition could be the secret to improving global cooperation. In November 2016, the Stockholm-based Global Challenges Foundation launched the New Shape Prize, a $5 million contest to reimagine global governance for the twenty-first century. The competition, open to anyone with an internet connection, garnered 2,702 entries from residents in 122 countries during its ten-month span. Now, with the window for submissions closed and the judging complete, preparations are underway to showcase the top proposals at November’s inaugural Paris Peace Forum, a gathering that bills itself as the Davos of collective action.

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The New Shape Prize highlights an encouraging trend in world affairs: the rise of prize competitions as tools for global innovation. In diverse fields, governments and philanthropists are offering multimillion-dollar sums for breakthroughs with transformative implications. Contest sponsors hope to use prizes as low-cost, low-risk vehicles for bringing new and unexpected talent to bear in addressing some of humanity’s greatest challenges. The premise has promise. Whether these aspiring changemakers prove successful, however, will depend in large part on their ability to select appropriate goals and recognize the limitations of the prizes they offer.

Prizes, Past and Present

Inducement prizes, which reward future innovation rather than past achievement, are old instruments in the governance toolkit. The British Longitude Act of 1714, for instance, established prizes for devising more precise methods for determining a ship’s longitude, a navigational problem of growing importance in an era of increasing transoceanic commercial and military activity. Likewise, Napoleon set out a reward of 12,000 francs in 1795 for finding a better way to preserve food, a critical logistical challenge for his armies. In each case, the prize sponsor looked to the broader public to address a problem whose solution had long eluded the experts.    

Legislators and heads of state have not been alone in dangling cash to induce competition. Twentieth century philanthropists jumpstarted the field of aviation with a series of prizes: The Daily Mail sponsored numerous competitions, and hotelier Raymond Orteig offered $25,000 for the first nonstop flight between Paris and New York, a reward famously captured by Charles Lindbergh. Contemporary philanthropists have followed suit—a 2009 report found that the aggregate value of large purses (over $100,000) had more than tripled over the preceding decade. Today, competitions to build nanoscale devices, map the ocean floor, and increase longevity are all underway, with at least one meta-contest even offering prizes for prize-design.

One plausible catalyst for this profusion of purses was the success of the Ansari XPRIZE. Launched in 1996, the contest offered $10 million to the first team “to build a reliable, reusable, privately financed, manned spaceship capable of carrying three people to 100 kilometers above the Earth’s surface twice within two weeks.” Twenty-six teams participated, investing over $100 million—more than ten times the value of the prize—into research and development. Mojave Aerospace Ventures, led by aerospace pioneer Burt Rutan, claimed victory in 2004 with SpaceShipOne, in what many hailed as a milestone for private spaceflight.

On one hand, the Ansari XPRIZE, with its grand designs and positive outcome, exemplifies how prizes can facilitate large-scale change. The XPRIZE Foundation, its Silicon Valley progenitor, credits the competition with launching a $2 billion-plus private space industry—a tremendous accomplishment, given spaceflight’s historical state-centrism and recalcitrance to newcomers. Little wonder, then, that a host of ambitious prizes have emerged in the competition’s wake. The possibility of global change on the cheap has obvious allure.      

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On the other hand, the Ansari XPRIZE provides an object lesson in the limitations and risks of inducement prizes. Following his team’s success, Rutan entered into a joint venture to develop spacecraft for Richard Branson’s space tourism outfit, Virgin Galactic. Despite regular promises to offer suborbital joyrides to the public, Virgin has failed to launch a single paying customer in the fourteen interim years. The company was, however, party to the death of a test pilot, as well as several others, during this same period. The extent to which the Ansari XPRIZE actually contributed to increasing access to space, then, is a matter of contention, dependent on perspective and time horizon. 

Setting the Global Prize Agenda

Prizes can be powerful tools for change, but only under the right circumstances. For a contest to be useful, its objectives should lie on the edge of possibility. If the goals are too difficult, they will go unaccomplished; too easy, and accomplishment means little. Threading the needle demands considerable expertise in defining the problem at hand. Setting objective criteria for success is also essential, as expertise has its limits. Even first-rate judges are bound to make errors in assessing the prospects of unfamiliar, untested ideas. This implies that essay contests like the New Shape Prize, for which evaluation is necessarily subjective, can often produce suspect results and misallocate awards.  

The need for objective criteria, however, does not imply that prize-design is apolitical. The 2012 Wolfson Economics Prize, which offered £250,000 for a plan for a country to leave the euro, and the 2013 IEA Brexit Prize, which offered €100,000 for a blueprint for Brexit, underscore how prizes can serve narrow interests. Even contests meant to increase the general welfare impose private costs and produce uneven gains: Many early aviators met their deaths while in pursuit of some purse, and private spacecraft provide a wider array of benefits to billionaires than subsistence farmers. Ignoring the political aspects of prize competitions can lead to blunders and precipitate backlash from aggrieved parties.

Choosing appropriate goals, then, entails contextual understanding of who stands to gain or lose, and how. A competition produces winners and losers not only at its conclusion, but for years afterward, as second- and third-order effects play out. For the Global Challenges Foundation and the New Shape Prize, this means considering the geopolitical fallout that would occur if the contest were to lead to an international reordering. It also implies a moral duty to account for social opportunity costs, implement reasonable safeguards, and redress grievances as warranted. Prize sponsors, philanthropists especially, cannot claim credit for benefits while disavowing harms.  

Inducing competition for the global good will require diligence and foresight in selecting goals and administering contests. National governments should establish guidelines for domestic prize competitions, intervening on a case-by-case basis to prevent abuses and mitigate risks. Philanthropists and other prize sponsors, meanwhile, should undertake wide-ranging public and expert consultations prior to, during, and after contests. Establishing multistakeholder prize committees, tasked with agenda setting and oversight, can help minimize harms and increase accountability.

With the right measures in place, prize competitions can and will remain important tools for global innovation and change. Innovation and change, however, are not one and the same. Realizing the promise of these competitions requires that ideation lead to implementation, as well as the acknowledgment that there is no ‘magic bullet’ solution to complex global challenges—prizes are only one governance tool among many.

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