Congressional Research Service The Library of Congress Washington. D.C. 20540 SOCIAL SCIENCE APPROACHES TO INNOVATION AND PRODUCTIVITY A fifieiit ‘{i3i‘?:E‘Fa“°“5 Ujrii+ in in ’i~§3~94 _ Christine Matthews Rose Analyst in Science and Technology Science Policy Research Division July 31 1986 ’ M e ,W . — ’ C zgtgn W-fi_'iVE{i“S$i€~§’ <«‘:‘.bm’&S‘ fiaf W30 ouri - olum ‘a C bl illiilllii illilli 11 2 0 niversit TITSS 010-10394 ABSTRACT A slowdown in U.S. productivity growth rates combined with a more competitive economic marketplace appear to have weakened the Nation's economic vitality. It has been argued that efforts to improve the competitiveness of U.S. industry have generally failed to use effectively the results of social science research, which has the potential to both enhance and inhibit productivity and innovation. Instead, industry has focused mainly on such issues as the effects of government regulation, on short-term profits, and on trade policies of U.S. competitors, factors which are more tangible and easier to control or measure. ‘Social science research methodologies that are important to innovation and productivity include personnel selection and assessment, survey research, program evaluation research, technology and risk analysis, statistical techniques and sampling theory, management strategies in complex organizations, and human factors research. Management and labor use of social science research may be a necessary condition for creating the environment in which industry can successfully improve its productivity performance and lower its costs of production. CONTENTS O O O I I O O O O O O O O I O O O O O O O O O O O O O O I O O O O O O O I O O O O O O O O O O O O O O C O O O O O O O O O O O I O O O O O O O O O O O O O O O O O O O I O O 0 O O O O O O O O O O O O O I O O O O O O O O O I O O O O O O O O O O O O . U.S. PRODUCTIVITY PERFORMANCE AND ITS IMPLICATIONS..................... O O O O O O O O O O O O O O O O O O I C O C O O O O O O O O Technological Versus Social Innovations............-.............. Utilizations/Limitations of Social Technologies................... HUMAN FACTORS RESEARCH: IMPORTANCE TO PRODUCTIVITY IMPROVEMENT........ Human Factors Defined............................................. Human Factors Research in the Design of Technology................ Human Factors Research in the Introduction and Adaptation to New Technology............................................... Human Factors Research in Management and Organization for the Workplace............................................... Human Factors Research and Risk Analysis.......................... ACTIVITYCOOOOOOOOOOOOOOOOOOOC00000000OOOOOOOOOOOOOCOO0 CONCLUSIDNSOOOOOOOOOOOQOOCOOOOOOOOOOOOOOOOOOOOOOOIOOOOOOOOOOQOOOOOOOOIO ii SOCIAL SCIENCE APPROACHES TO INNOVATION AND PRODUCTIVITY INTRODUCTION The current debate on the reasons for the declining rate of productivity growth and the extent of Federal involvement in the support of innovation has largely ignored the potential contributions of the social sciences other than economics.1 Innovation and productivity issues are not limited to technical considerations, but also involve organizational and social factors. The results of social science research can operate, some would argue, as a decisive factor in raising the efficiency and productivity of industry. While technological innovation can and does play a major role in stimulating productivity, human, social, and institutional issues can also figure into improved performance relative to past efforts. 1 The social sciences are not representative of a uniform set of knowledge. Several disciplines, theoretical orientations and various methodologies are subsumed under the social sciences. For the purpose of this paper, social science will be examined in terms of the following methodologies: social science as a source of social technologies, social science as a source of general and specific knowledge pertaining to innovation and productivity, and social science as a source of management tools. This approach has been used by Tornatzky, Louis G., Solomon, Trudy, et al. Contributions of Social Science to Innovation and Productivity. American Psychologist. v. 37. p. 738. As noted, this discussion excludes economics, which is a social science discipline. CRS-2 It has been argued that, as a whole, U.S. industry has failed to recognize the value of the social and behavioral sciences in increasing productivity and employee satisfaction and for better matching of individuals to jobs. V. R. Buzzotta, chairman of Psychological Associates, a management and sales training firm, stated that: Ultimately, it is our failure as a nation to heed and cultivate the human dimension of work that helped induce and now sustains our productivity crisis. If the American worker's output has fallen behind that of the Japanese worker, if our manufactured goods no longer command their former respect in the international marketplace, if our troubles with defective military hardware raise questions about our national security, perhaps these are all the wages of the quiet frustration in the collective heart of our work force.2 There is no single cause for the Nation's apparently declining economic performance relative to that in other countries. Many critics believe that U.S. competitiveness problems result primarily from macroeconomic factors such as the value of the Japanese yen and the American dollar. Other analysts have concluded that insufficient capital investment, trade policies of our competitors, and over-emphasis on short-term profits are causes of the decline in the ability of U.S. products to compete in world markets. Brian L. Usilaner, Associate Director, National Productivity Group, General Accounting Office, stated that the slowdown has resulted from the decline in productive quality of the work force, capital investment, technology, and innovation.3 However, some researchers in the fields of behavioral science and personnel selection 2 Buzzotta, V. R. A Quiet Crisis in the Work Place. New York Times, Sept. 4, 1985. p. A27. 3 U.S. Congress. House. Committee on Science and Technology. Subcommittee on Science, Research and Technology. The Human Factor in Innovation and Productivity. Hearings, 97th Cong., 1st Sess., Sept. 1981. Washington, U.S. Govt. Print. Off., 1981. p. 48. (Hereafter cited as Human Factor in Innovation and Productivity.) CRS-3 maintain that a factor contributing to the slow down of U.S. productivity growth is the lack of effective coordination between human resource development and technological development. The investment of capital and the introduction of new technology are often integral to any productivity improvement program, but so are the human resources of the organization. Estimates given by the president of the Work in America Institute indicate that the human resource factor contributes between 10 and 25 percent of productivity growth.4 In general, labor accounts for 50 percent or more of controllable costs. This percentage increases in labor-intensive service occupations where people account for approximately 70 to 80 percent of all costs.5 Vincent A. Sarni contends that the greatest threat to U.S. economic growth will not be from technical constraints or from lack of capital, but from our unwillingness to integrate technology into our culture value-system. He has stated that: . . . technology is not just nuts and bolts and silicon chips. It is the application of human knowledge for human purposes. It is an extension of ourselves - a tool we use to achieve our ends. And it is the human factor that will determine the future direction of technology and our response to economic challenge.6 Some economists believe that one way to increase productivity is to develop policies that will promote the modernization and expansion of the Nations’ capital equipment. Such economic inducements include tax credits and incentives for plant investments. One set of interpretative data indicate that 4 Ibid., p. 54. 5 Ibid. 6 Sarni, Vincent A. To Reverse Technological Erosion, Emphasize Human Factor. Financier, v. 9, Sept. 1985. p. 34. CRS-4 inadequate capital formation accounted for approximately 14.0 percent of the post-1973 productivity slowdown in the total private business sector, which includes farms.7 In the nonfarm business sector, slow capital formation accounted for 11.0 percent of this slowdown.3 The decline in the manufacturing sector during this same period, however, could not be attributed to insufficient capital investment.9 Among the major causes of the slowdown were low outlays for research and development (R&D), increase in energy prices during the 1970s, and rise in the direct and indirect costs of regulation.1O Most current approaches to increased productivity focus on economic and technological policies. Such approaches give minimal attention to the various social factors involved in the development and adaption of innovations and the potentially significant contributions that non-technological (social) inno- vations can make to national economic development. However, the issue of social innovations has received some attention. On September 23, 24, 1985, the U.S. Department of Commerce's Human Resource Development Task Force cosponsored 7 Baumol, William J. and Kenneth McLennan. Productivity Growth and U.S. Competitiveness. A supplementary paper for the Committee for Economic Development, New York, 1985. p. 8. 8 Ibid. Nonfarm business sector productivity is productivity in all industries excluding agriculture. 9 Estimates of the effect of changes in the rate and level of capital investment on the productivity slowdown vary substantially according to the time periods selected for measuring. This reported data compared productivity growth between 1948-1973 and 1973-1981. 10 Baumol and McLennan, p. 9. CRS-5 the Human Factors, Technology and Productivity Conference, focusing on the relationship between.human factors issues and U. S. productivity efforts. Specific areas addressed in the conference included: (1) (2) (3) (4) (5) (6) Employee participation in technological change; Potential productivity gains that can result from changes in employee attitudes and the results of these changes on new skill requirements; Changes in corporate culture and ways of doing business; Ways to remove barriers and create the necessary incentives for better uses of advanced training technologies; Opportunities and problems of developing and reskilling employees; and Increasing productivity through management and workforce cooperation.11 In a summary of the panel discussion on the Productivity Potential of Human Factors, John Kendrick, Professor, Department of Economics, George Washington University, and Kenneth McLennan, Vice President and Director of Industrial Studies, Committee for Economic Development, concluded that: The human resource approach--using human factors in productivity-- can be very powerful. It is a necessary condition to raising productivity and becoming competitive, but it is not sufficient. [Emphasis added] Government must provide the economic environment to encourage savings and capital investment.12 As Government policies are developed, some argue that it is important that the range of such policies be expanded to include efforts to encourage the private 11 Human Factors, Technology and Productivity. and Recommendations. Development Task Force, American Association of Community and Junior Colleges, American Society for Training and Development, Association for Supervision and Curriculum Development, National Governors‘ Association and the Public Agenda Foundation. Sponsored by U.S. Dept. of Commerce, Human Resource Sept. 23, 24, 1985, Washington, D.C. p. 3. 12 Ibid., p. 10-11. Conference Proceedings CRS-6 sector to incorporate the results of social science research, others are skeptical. This paper will attempt to examine the importance of social innovations and the contributions that social sciences can make to maximize the economic and social returns accruing from investments in science and technology. U.S. PRODUCTIVITY PERFORMANCE AND ITS IMPLICATIONS The U.S. economy experienced a historically high rate of productivity growth measured by output per hour during the period 1948-1973.13 The following decade the rate of growth fell sharply, threatening the growth of our standard of living and our trade position in the international market. Each of the major sectors -- manufacturing, farming, and nonfarming-nonmanufacturing -- reported lower rates of growth in output per person hour. The United States was not unique in this regard. In published annual indexes of productivity for 116 countries, 80.0 percent of the countries showed slowdown in productivity growth after 1973.14 From 1973 to 1982, the average annual rate of growth in output per hour in the U.S. business sector was approximately one fourth the rate during the period 1948 to 1973.15 An analysis of productivity growth in 11 countries (the United States, Canada, Japan, and 8 Western European countries) indicate that from 1960 to 13 U.S. Department of Labor. Bureau of Labor Statistics. Trends in Multifactor Productivity, 1948-1981. Bulletin 2178. Washington, U.S. Govt. Print. Off. September 1983. p. 3. 14 Ibid., p. 3. 15 lbid. CRS-7 1981, the average annual rate of growth in U.S. output per worker hour in manufacturing was clearly below that of any of the other countries and approximately half as large as the combined average for the 10 foreign countries.16 All countries experienced a decline in productivity growth in manufacturing after 1973, but their productivity growth rates remained clearly above that of the United States. Canada, however, was an exception. For the United States and Canada, annual productivity rates were practically the same between 1973 and 1981.171 Recent figures indicate that U.S. manufacturing labor productivity rose 2.8 percent from 1984 to 1985, equal to increases recorded by Canada, Italy, and the United Kingdom and exceeding those levels of Denmark, Norway and Sweden.18 Three major industrial countries did, however, record larger increases -- France, 4.0 percent; Japan, 5.0 percent and West Germany, approximately 6.0 percent.19 There is concern that the United States will not be able to maintain its postwar world leadership in national productivity without improving its productivity growth rate and maintaining it for a period of years. Kenneth 16 Ibid. 17 Ibid. International comparisons are made in terms of output per employee-hour in manufacturing to achieve comparability of the series for each country. 18 U.S. Department of Labor. Bureau of Labor Statistics. International Comparisons of Manufacturing Productivity and Labor Cost Trends - Preliminary Measures for 1984. UDDL: 86-250. Washington, U.S. Govt. Print. Off. June 18, 1986, p.1. 19 Ibid. CRS-8 McLennan, Vice President and Director of Industrial Studies, Committee for Economic Development, maintains that: . . . [S]uch a miraculous improvement cannot possibly occur without significant changes in government policies and in management and labor practices. [emphasis added] Growth in U.S. productivity is now far behind that in a number of leading industrial countries, and the international com etitiveness of many U.S. industries will continue to be threatened. Others maintain that the comparative growth rate figures are somewhat misleading; they stress that the countries of Western Europe and Japan have in large part just been catching up from where they were after World War II, essentially applying innovative technologies pioneered by the U.S. and starting from an artificially low base that reflected devastated economic infrastructures. ALTERNATIVES TO TECHNOLOGICAL INNOVATION Technological versus Social Innovations Technological innovation is a dynamic process by which industry seeks to improve goods, and services or the process by which it provides them. It is a process which involves, among other things, idea origination, research and development, investment commercialization, and diffusion.21 Successful innovations enhance economic growth through product and productivity 30 Ibid. 21 U.S. Library of Congress. Congressional Research Service. Industrial Innovation: The Debate Over Government Policy. Issue Brief No. IB84004, by Wendy Schacht, 1985. (continually updated). Washington, 1985. 21 p. CRS-9 improvements and the income generated by these improvements when taken into the marketplace. In the past several years, Federal and State governments have identified technological innovation as a key to future economic growth and have developed de facto innovation "policies" by emphasizing hardware development and technology transfer. However, productivity change and economic growth often includes both technological and non-technological innovations. Almost 20 years ago, Mansfield discussed the synergistic relationship between innovation and social science research: The concept of innovation embraces not only the fruits of advances in natural and engineering science but the results of what might be broadly termed social science research: that is, new techniques of organization, marketing or management. Those innovations generated by social science research--social technologies--include the development and use of research methodologies, even though there has been no association with material systems or machines (hardware technologies). Farina Chummer and Micheal Kelly conclude that these social innovations can, in some instances, complement the introduction of new hardware technologies in both the production and assimilation processes, potentially resulting in productivity and social gains exceeding those attributable to technology alone.23 The social sciences have an equally crucial role to play in helping to maximize the social returns derived from innovations. The assimilations of new technologies and the avoidance, in some cases management, of the socioeconomic and cultural dislocations that can accompany new techno- logies require a greater knowledge than currently exists of the effects of science and technology on society. To achieve this will necessitate a greater and more systematic resort to social science research than 22 Mansfield, Edwin. The Economics of Technical Change. New York, 1968. p. 76. 23 Chummer, Farina and Micheal Kelly, p. 26. CRS-10 currently exists. It is important to note here that such efforts must not be seen after an examination of technological advances. To be effective, they must be an integral part of the innovation process.24 Included among the social technologies that may be important to innovation and productivity are personnel selection and assessment, survey research, program evaluation research, technology and risk analysis, statistical techniques and sampling theory, management strategies in complex organizations, and human factors research. Businesses use information obtained from surveys and samplings to assess public attitudes toward product alternatives and to predict future revenue. Innovators use survey research methodology to determine the market potential of new products and services. In a 1982 publication of the National Science Foundation, it was estimated that the United States spends $4.0 billioni annually on all kinds of survey research.25 The technique of program evaluation is important to the private sector's interest in innovation and productivity because it allows for assessments of the relative merits of marketing, training, organization, and executive development programs. Technology and risk assessments have evolved to help determine the long-term effects of various technological choices. Such assessments are utilized today as components of regulatory and other public policy debates. 24 Ibid., p. 26. 25 National Science Foundation. Only One Science. Twelfth Annual Report of the National Science Board. Washington, U. S. Govt. Print. Off., 1982. p. 82. CRS-ll Management structure and processes of industry are frequently rooted in social science research. Included in such research is the study of the relationship of employee satisfaction/morale to productivity, characteristics of resistance to changes in management practices, the effects of employee participation in decision-making on productivity, and employee profit-sharing plans. Social science techniques also have been used in personnel selection and classification procedures and for improving employee satisfaction and motivation as well as employee efficiency. It has been estimated that 548 million work days are lost every year, creating a productivity drag of more than $36.0 billion.26 The consequences of such factors as absenteeism and turnover impact negatively on the U. S. economy and production. Social and behavioral science technologies hold promise for improving employee satis- ‘faction and motivation, as well as employee efficiency. Social science research can play a major role in improving the safety of work settings with techniques designed to produce safer conditions. In written testimony before the Senate Subcommittee on the Department of Housing and Urban Development and Independent Agencies Appropriations, for the National Science Foundation, Michael S. Pallak, Executive Officer, American Psychological Association (APA) stated that industrial accidents are the fourth leading cause of death in the United States.27 Psychologists have constructed a program for 26 U.S. Congress. House. Committee on Ways and Means. Congressional testimony on Research and Development Tax Credit. Hearings, 99th Cong., lst sess., July 31, 1984. Written testimony of Michael S. Pallak. 27 U.S. Congress. Senate. Committee on Appropriations. Subcommittee on HUD-Independent Agencies. National Science Foundation Appropriations. Hearings, 98th Cong., 1st Sess., May 24, 1983. Written testimony of Michael S. Pallak. CRS-12 lowering the frequencies of specific hazards in work areas. In one particular study, both supervisors and workers were able to reduce workplace injuries by approximately 60 percent.23 With its to lowering of the frequency of specific hazards, the program was found to produce increases in meetings relating to safety-related issues, increased worker suggestion for safe conditions, and increased production. As noted previously, the emphasis of most Federal innovation and productivity activities, particularly in this Administration, has been on hardware development, technology transfer deregulation, and tax incentives, not on social technology considerations. The major Federal support has been through grants for research and development (R&D), tax breaks for qualified R&D, technical education, patent policy concerning the results of federally funded R&D, and for programs to encourage the transfer of research results to industry. Recent public policy focus has excluded, to a large extent, investments in social science research, an exclusion exemplified by the provisions of the Research and Experimentation Tax Credit, part of the 1981 Economic Recovery Tax Act.29 One of the major objectives of the R&D tax credit was to improve the economic competitiveness of industries performing research and development. However, the tax credit does not include social science 23 Ibid. 29 U.S. Congress. House. Committee on Ways and Means. Subcommittee on Oversight. Report on H.R. 4242, the Tax Incentive Act of 1981. H. Rept. No. 97-13. 97th Cong., 1st. Sess., 1981. The Research and Experimentation Tax Credit, section 44F of the U.S. Tax Code (Credit for Increasing Research Activities), provides a 25 percent tax credit for firms which increase their qualified research and experimentation activities over a three year base period. CRS-12 for lowering the frequencies of specific hazards in work areas. In one particular study, both supervisors and workers were able to reduce workplace injuries by approximately 60 percent.23 With its to lowering of the frequency of specific hazards, the program was found to produce increases in meetings relating to safety-related issues, increased worker suggestion for safe conditions, and increased production. As noted previously, the emphasis of most Federal innovation and productivity activities, particularly in this Administration, has been on hardware development, technology transfer deregulation, and tax incentives, not on social technology considerations. The major Federal support has been through grants for research and development (R&D), tax breaks for qualified R&D, technical education, patent policy concerning the results of federally funded R&D, and for programs to encourage the transfer of research results to industry. Recent public policy focus has excluded, to a large extent, investments in social science research, an exclusion exemplified by the provisions of the Research and Experimentation Tax Credit, part of the 1981 Economic Recovery Tax Act.29 One of the major objectives of the R&D tax credit was to improve the economic competitiveness of industries performing research and development. However, the tax credit does not include social 23 Ibid. 29 U.S. Congress. House. Committee on Ways and Means. fiubcommittee on Oversight. Report on H.R. 4242, the Tax Incentive Act of 1981. H. Rept. No. 97-13. 97th Cong., lst. Sess., 1981. The Research and Experimentation Tax Credit, section 44F of the U.S. Tax Code (Credit for Increasing Research Activities), provides a 25 percent tax credit for firms which increase their qualified research and experimentation activities over a three year base period. CRS-13 science research as "qualified research" for which corporations may take a tax credit. Though this act expired on December 31, 1985, the House Ways and Means Committee, on February 5, 1986 marked up a bill to provide a short-term extension of expiring provisions in order to cover the period of the tax debate. However, the Research and Experimentation Tax Credit, incorporated in the Tax Reform Act of 1986, again excludes expenditures for research in the social sciences as qualifying for the R&D tax credit.3O Not surprisingly, some social scientists have criticized the provisions as they exist and urged that the bill be broadened to permit industries which currently do not qualify to claim credit. In testimony before the House Committee on Ways and Means, Alan G. Kraut, Deputy Executive Officer for Policy Studies, American Psychological Association, stated that: To continue.to exclude social and behavioral research from the favorable tax treatment offered to corporations through this tax credit is to create disincentives for firms to invest in this valuable research. Industry and society as a whole would lose potential benefits.31 There are, however, reasons for this exclusion and a case to be made in support of it. 30 In December 1985, the House passed H.R. 3838, the Tax Reform Act of 1985. In June 1986, the Senate passed an amended version of H.R. 3838. 31 U. S. Congress. House. Committee on Ways and Means. Subcommittee on Oversight. Research and Experimentation Tax Credit. Hearings, 98th Cong., 2nd Sess., August 2, 3, 1984. p. 766. (Hereafter cited as Research and Experimentation Tax Credit.) CRS-14 Utilizations/Limitations of Social Technologies While social technologies are used extensively in certain areas of marketing, they have not received widespread adoption and utilization in the private industrial sector. Louis C. Tornatzky and Trudy Solomon of the National Science Foundation (NSF) propose several explanations for the limited adoption and utilization. One reason is the inability to identify exemplary social technologies, those having a strong research base, demonstrable benefit, sand replicable procedures.32 The third characteristic is especially difficult to attain. While the scientific journals of the social sciences perform that function for researchers, it is difficult for the relatively untrained user of this kind of social science knowledge and methods, such as managers in corporations or public agencies, to make informed choices about what is a viable social technology and what is a social fad.33 Tornatzky and Solomon state that another possible factor preventing the maximization of social technologies’ contributions to economic revitalization is that there exist few incentives for industry to develop systematically, market, and disseminate social technologies. The limited marketing that does occur is primarily performed by nonprofit institutions and specialized consulting firms. One such nonprofit institution is the American Productivity 32 Tornatzky, Louis G., Trudy Solomon et al. Contributions of Social Science to Innovation and Productivity. American Psychologist, v. 37, July 1982. p. 742. 33 Ibid. CRS-15 Center which is heavily engaged in disseminating various productivity-enhancing social and managerial technologies to private industry.34 Yet another reason for the limited utilization of social technologies cited by Tornatzky and Solomon is the difficulty in realizing profits from any investments in their innovation. Products resulting from hardware technological investments can be marketed profitably with protection of patent laws. In contrast, the nonproprietary nature of social technologies makes the results readily accessible in the scientific literature. Another possible explanation for the underutilization of social technologies is the lack of understanding of the time-period necessary to develop a concept to the point where it can be applied. For the well- validated social technologies that have evolved, the period for research and development (R&D) was approximately 10 years.35 This R&D lag period is parallel to that which exists in the physical sciences and, as a consequence, it is argued, should be factored into the continuity and stability in R&D funding support and use of the social sciences. However, social and institutional factors are more subject to change than purely technical factors and consequently validation of social technologies may be more of a continuing process. Edwin Land of Polaroid asserts that, ". . . we do not treat our social research and development with the same scientific detachment and persistance we show with innovations in hardware."36 34 American Productivity Center. Reward Systems and Productivity. Houston, Texas, l983. 16 p. 35 Tornatzky and Solomon et al, p. 743. 36 Human Factor in Innovation and Productivity, p. 10. CRS-16 Criticism, however, has been made of social technologies and social science R&D in that they are esoteric and unrelated to real goals.37 In addition, Michael Maccoby, Kennedy School of Government, Harvard University stated that . . . social scientists can make themselves a nuisance by their compulsion to measure everything, including the unmeasurable."38 Maccoby further explained that while some variables fit within the traditional framework of professional research by social scientists, other measurements require a more innovative type of analysis which examines motivations, values and industrial relations along with technical and economic factors.39 Finally, the results of social science research when used in private industry have not been universally favorable. Though successes are common, and many applications are routine, failures are not uncommon and tend to attract publicity. The balance of this paper will focus on the degree of utilization of one specific social technology, that called "human factors research". Human factors research pertains to the interaction of technical devices and the human environment. Discussions concerning efforts to improve U.S. productivity often downplay the role of the human factor in innovation and productivity. Generally, the contributions of human factors research have been unevenly studied or understood. Only in the last 10 years have human factors research issues resulted in increased public attention. In testimony before the House Committee on Science and Technology, Richard W. Pew, Principal Scientist, Bolt, 37 Ibido,'po 1.20 38 Ibid., p. 11. 39 lbid. CRS-l7 Beranek and Newman Laboratories, attributed this increased public attention to three kinds of development: (1) accidents receiving wide spread attention like that at Three Mile Island Power Plant or the Bophal incident; (2) growing awareness that major deficiencies in military systems directly result in the inadequacy of current system design for use and ease of maintenance; and (3) increased public awareness that the effectiveness of high-technology systems in the workplace, schools, and home is dependent upon the amount of attention attributed to the needs and reactions of the human users of that technology.40 HUMAN FACTORS RESEARCH: IMPORTANCE TO PRODUCTIVITY IMPROVEMENT Human Factors Defined As used by practioners of the discipline, the "human factor" involves people interacting with technical devices and with the environment in which they function. This person/machine dynamic approach treats, for example, person/vehicle control and person/process control, both concentrating on the human contribution to the avoidance of system failure and ease of adaptability to the new technologies which can make a person more productive in his/her job. Human factors research is a discipline that is approximately 50 years old, defined during World War II by military researchers seeking to improve the relative ease and safety of weaponry use. ,40 U.S. Congress. House. Committee on Science and Technology. Task Force on Science Policy. Role of the Social and Behavioral Sciences. Hearings, 99th Cong., 2nd Sess., Sept. 19, 1985. Hearings Transcript, Testimony of Richard W. Pew. (Hereafter referred to Role of Social and Behavioral Sciences.) CRS-18 The terms, "human factors" and "ergonomics," are sometimes used synony- mously. Though they both describe interaction between the individual and the job, they do, however, have differing emphases. As practiced in the United States, human factors research has focused on the individual's behavior as she/he interacts with equipment, the environment, and the workplace, and on individual size and strength capabilities in relation to workplace and equipment design. The focus of ergonomics basically includes physiological responses to work, with various definitions ranging from "a technology concerned with the application of psychological and engineering data to problems related to the mutual adjustment of man and machine" to "the science of making tools both easy to use and optimally productive."41 The passage of the Occupational Safety and Health Act in December 1970 (P.L. 91-596) created an increased awareness of ergonomics in industry. Human Factors Research in the Design of Facilities and Technology One challenge to management which might improve productivity is the design of structures and environments which are people-oriented. It is possible for new technologies to create negative physical and psychological reactions if equipment is not set up properly and management is unaware of the human factors involved. Incorporating human factors at this level of technology involves predicting how a particular design solution will interact with a myriad of other design decisions, which clearly should not be incompatible. 41 Stockton, Richard F. Ergonomics: Science or Art? The Lamp, v. 6, CRS-19 There is statistical evidence which indicates that efforts to improve productivity by incorporating human factors engineering/ergonomics can bring significant results. A study conducted in 1982 by the National Institute of Occupational Safety and Health found 24.5 percent greater productivity when management and industry employed proper ergonomic set-up of a visual display terminal work station.42 In addition, the World of Work Report noted that ergonomically designed furniture has been shown to result in a 10.0 percent performance increase for dialogue transactions and 15.0 percent increase for data entry.43 The utility of human factors research, both basic and applied, has perhaps been most fully tested in identifying potential user related problems in designing new weapon systems. In the United States, human factors principles apparently have been accepted more readily by aerospace and military industries than other industries. It has been estimated that in 1984 approximately 80 percent of all human factors/ergonomic practitioners were employed by the military.44 Since 1979, the Navy has developed policies and procedures to ensure consideration of the personnel and training resource implications of its weapon systems during the procurement process. The Army has instituted a similar program as a result of several internal studies citing human factors error and training problems of several weapon systems. 42 World of Work Report. Ergonomics and Productivity, v. 9, Aug. 1984. p. 5. ‘ 43 Ibid., p. 5. 44 Stockton, p. 17. CRS-20 William Rouse, Director of the Center for Man-Machine Systems Research argues that because of the technology-driven characteristic of the majority of design efforts within the military, the procurement often tends not to address the human factors issues until the last phase of design where changes can become either extremely expensive or impossible.45 The Army's teetering rotor helicopter was identified as having a human factors flaw, one that was reported to have claimed 250 lives and cost millions in dollars. As designed, the helicopter had a tendency to roll to the right when being put through certain maneuvers. Pilots made a natural response by pulling the control stick to the left, a response that would cause the helicopter blades to hit the rotor mast which is connected to the transmission. As a result, the blades could shear off the mast, causing the helicopter to crash. All of this would happen in a matter of seconds. A recommendation was made in 1984 to correct the problem at a cost of $35.0 million.46 In another study conducted by the Army of the M-1 (main battle tank), it was found that 80.0 percent of the user- related problems could have been avoided if the existing human factors guidelines had been filtered into the design process.47 45 Wickens, Chris and William Rouse. The Role of Human Factors in Military R&D. Paper presented before the Federation of Behavioral, Psychological and Cognitive Sciences. (Edited Transcript). Washington, D.C. Jan. 1985. p. 7. 46 Cordes, Colleen. Military Waste: The Human Factor. American Psychological Association. APA Monitor, v. 16, July 1985. p. 17. 47 Ibid., p. 18. CRS-21 Human Factors Research in the Introduction and Adaptation to New Technology Computer and telecommunications technologies have had a significant impact on personnel involved with aviation systems. Pilots, air traffic controllers, and aircraft maintenance personnel are being required to handle increasingly complex systems. Here, proponents urge that human factors research can make a contribution by: (1) determining how people process information and make decisions, especially when exhausted and under severe stress, (2) assessing the capabilities and limitations of people who maintain and operate increasingly complex systems, and (3) designing and placing gauges and controls in the aircraft cockpit for maximum readability and efficiency of control. Automated systems were put on aircraft to decrease the workload of pilots, but at times, they have the adverse effect. In a paper presented before the Federation of Behavioral, Psychological and Cognitive Sciences, Rouse stated that with the continued complexity of the design systems, especially computer aided design methods, automation often increases rather than decreases human responsibility and mental workload. What automation does is simply redefine human functions from those of a continuous controller and manual responder to those of a supervisor, resource managerg decision maker and diagnostician who must step in when things go wrong. The human being does however remain the essential, yet limited component in system performance. Rouse further states that the situation may arise where a system might emerge that no one understands. The sophisticated system we will have designed is a package that will work for some particular weapon system or some sensitive function, 48 Wickens, Chris and William Rouse, p. l. CRS-22 and no single person will understand that system. However, someone will have to maintain it.49 Human factors research could examine the cognitive capabilities and the differences between individuals in performance to determine how a given system may be changed or reconfigured. An example of possibly inadequate attention to the capabilities of an individual in designing a complex technology-based product may be demonstrated with the design of the Navy's F-18. Pilots of the F-18 fighter jet have nicknamed it the "porcupine". Its throttle has 9 switches, with most having more than one function. The stick grip, manipulated by the right hand, has an additional 7 switches. Contained on the instrument panel are 59 indicator lights, 73 warning indicators, 40 display formats, 675 acronyms appearing on three different visual display systems, 177 symbols, appearing in any of four different sizes, and 6 different auditory tones, each with a different meaning that a pilot must be able to interpret and manipulate in a high-speed, low-level, ground attack.50 Considering human factors issues when undertaking technical development can help to facilitate an efficient and effective human-computer interface. It is claimed that more knowledge on the manner in which humans use and understand complex systems in a high demand environment is necessary to foster better system design or to seek alternative technologies. Human Factors Research in Management and Organization for the Workplace 49 Ibid., p. 9. 50 Ibid., p. 1. CRS-23 Some have blamed the perceived decline in the growth of technological innovation on high taxes, rigid antitrust laws, environmental safety rules, etc., as was noted previously. Others, including Robert H. Hayes and William J. Abernathy have concluded that the more central problem lies in the management practices and strategies of U.S. companies. By focusing attention on management's role in the innovation process, they maintain that: The long-term solutions to America's problems may not be correctable simply by changing our government's tax laws, monetary policies and regulatory practices. It will also require some fundamental changes in management attributes and practices. Management style is important to improving human resource productivity because it structures the environment which permits productivity a measure of success. The Japanese approach to human resources utilization may be instructive. For example, a Chrysler plant, when taken over by the Japanese, produced essentially the same number of automobiles with approximately half the number of people. In another example, it has been estimated that in 1982 Toyota had a $1,718 cost advantage (after shipping) over General Motors in the production of a small car. Part of this advantage is a result of lower wages and fringe benefits ($550), and part is as a result of superior technology ($73). However, according to this widely discussed study, approximately $1,000 of the difference was attributed to skill in utilizing existing human FESOUITCBS o 51 Howard, Niles and Susan Antilla. Putting Innovation to Work. Dun's Review, v. 58, Nov/Dec. 1981. p. 72. 52 Yankelovich, Daniel and John Immerwahr. Putting the Work Ethic to Work: A Public Agenda Report on Restoring America's Competitive Vitality. New 19839 P: 46 ' ' CRS-24 Myron Tribus, former Director, Center for Advanced Engineering Study, Massachusetts Institute of Technology, states that managerial ability can make a significant difference in the productivity of almost any organization. In a report prepared for the Wall Street Journal, 80 percent of the top managers from 221 companies claimed poor management as the major reason for sagging productivity.53 Tribus posits that with better management, productivity will improve, profits will be available, and capital investments can be used to their best advantage. He maintains that if productivity is low because of poor management, increased productivity will not be realized simply with greater capital investment. It is acknowledged that one of the factors contributing to Japanese economic and productivity growth was the country's successful postwar adoption and adaptation of Western technologies. It was at this time that the Japanese took many U.S. management ideas and adapted them to their particular cultural system. Tribus and J. Herbert Hollomon view Japan's relatively better productivity growth as a result of their different approaches to the management of both people and machines--approaches that have produced significant improvements in both productivity and quality.54 It should be noted that the social structure plays an important role in the functioning of the Japanese management style. The management system in Japan is culture-bound, with structures such as lifelong employment and a reliance on social hierarchy. It 53 Human Factors in Innovation and Productivity, p. 49. 54 Tribus, Myron, and J. Herbert Hollomon. Center for Advanced Engineering Study and Center for Policy Alternatives. Massachusetts Institute of Technology, Cambridge, MA. Productivity . . . Who is Responsible for Improving It? Unpublished paper. CRS-25 is argued that as the Japanese adapted our organization and management techniques to their culture, we could also adapt and use those aspects of the Japanese system our research shows to be beneficial. Or, in lieu of adopting Japanese-style management practices , U.S. organizations might benefit from understanding them. With an understanding of Japanese strengths and weaknesses, U.S. managers might better design strategies to compete in international markets.55 Quality circles have been found to be useful for productivity improvement in certain industrial organizations. The quality circle concept is a social technology used extensively by the Japanese but which originated directly from the theoretical and applied substantive concerns of U.S. social science. Quality circles are teams of workers, including managers and nonmanagers, who meet regularly to anticipate and to solve production and quality problems. Quality circles recognize that quality control is a joint responsibility and that solutions often reouire joint effort. The focus of a quality circle program is quality improvement, productivity enhancement, and increased employee involvement. Employees with input tend to be more productive than line workers and have acquired experience which can be helpful to management decision-making. Quality circles may provide advantages for management and employees, but they also may have limited effectiveness. Since quality circles do not have to include everyone, management can regulate the number of employees involved. Also, since quality circles tend not to have decision-making power, management can scale down the 55 Puri, T. and A. Bhide. The crucial weaknesses of Japan Inc. Wall Street Journal, June 8, 1981. p. 20. CRS-26 resources provided for their activities and disband them if they become unproductive. While this social technology has been used in foreign industrial settings, it has received limited domestic use. The United States became interested in « more stringent quality control techniques after witnessing the superior quality of Japanese products in diversified fields. A 1982 study conducted by the New York Stock Exchange revealed that 44.0 percent of all U.S. companies with more than 500 employees had quality circle programs of some type, with approximately 3 out of 4 having started after 1980.56 It is not easily documentable why these programs became so prevalent during this period. Some contend that the single most important reason was the perceived high quality of Japanese products being sold at competitive prices in the United States and that better 57 131 quality control was seen as way to maintain or regain competitiveness. Quality circles are important considerations in any attempt to improve quality and productivity. However, they are not the prime sources of improvement. In an analysis done by the Nashua Corporation, it was found that only 10 to 15 percent of the gains in productivity resulted from initiatives in quality circles. The report found that the most important gains were made through other managerially directed programs. Reports of successful quality circle programs can create a misleading picture of the preparation and implementation requirements, the length of time it takes to launch an effective program, and the costs involved. In testimony 56 Lawler, Edward E. III, and Susan A. Mohrman. Quality Circles After the Fad. Harvard Business Review, v. 63, Jan/Feb. 1985. p. 66. 57 Ibid., p. 66. CRS-27 before the House Science and Technology Committee on the Human Factor in Innovation and Productivity, Richard Balzer, Vice President, Yankelovich, Skelly and White, Inc., suggested that in many instances, organizations wish to arrive at answers before issues have been fully understood has resulted in a short life span for quality control programs.53 Tai K. Oh, a consultant to businesses in the United States on Japanese management techniques contends that quality circles provide temporary relief to management-employee tensions and fail to address the fundamental issues that cause these tensions initially (i.e., lack of respect and underutilization of workers.59 Oh estimates that approximately 60 percent of U.S. industries that initiate quality circles experience failure. 60 Balzer warned that, ". . . without an appreciation of how organizations adapt to and avoid change well intentioned responses to the human factor may be related to a kind of faddism that has plagued many organizational efforts in the last twenty years."51 Human Factors Research and Risk Analysis Human factors issues arise in every domain in which people interact with the products of a technological society. Human factors research often is utilized in determining, after the fact, what went wrong in an accident. 58 Human Factor in Innovation and Productivity, p. lO6. 59 Marks, Mitchell Lee. The Question of Quality Circles. Psychology Today, Mar. 1986. p. 38. 60 Ibid. 61 Human Factor in Innovation and Productivity, p. 106. CRS-28 The National Transportation Safety Board (NTSB) has expanded its staff to include psychologists in an attempt to understand better how human factors contribute to transportation accidents. Donald Engen, National Safety Board member, has stated that human performance factors are: ". . . [T]he guts of every accident. We find time and time again that an individual didn't do the procedure which was prescribed or forgot to do something."62 Pilot error has been found to be a factor, not necessarily a cause, in approximately 66.0 percent of fatal accidents involving large commercial airlines. In fatal accidents of commercial planes, pilot error was identified in 79.0 percent of the cases.63 The Human Performance Division of the NTSB investigates pre- accident factors such as human engineering, fatigue, work cycle, the environment, and medical problems. From examination of these variables, the Division makes safety recommendations to industry and/or regulatory agencies as to the probable cause of an accident. Human performance factors were a part of accident investigations prior to the creation of the Division but on a smaller scale. Nuclear power represents a new kind of promise and problem for society and organizations. The social organization of high-benefit, high-risk technology requires nearly error-free or error-buffered managerial and operational systems since failure can be potentially catastrophic. The events that began at Unit 2 of the Metropolitan Edison power station on March 28, 1979, at Three Mile Island (TMI), were indicative of the magnitude of such a potential accident on 62 Bales, John. Safety Board Homes in on Human Factors. American Psychological Association. APA Monitor, v. 15, Mar. 1984. p. 21. 63 Bales, John. Human Factors Studies Help FAA to Make Skies Safe. American Psychological Association. APA Monitor, v. 17, Feb. 1986. p. 10. CRS-29 public health and safety. At the request of the President's Commission on the Accident at Three Mile Island (the Kemeny Commission), the Social Science Research Council commissioned social scientists to write a series of papers on the human dimensions of the event. The Social Science Research Council was asked to prepare consultant reports on various social science aspects of nuclear power in general and the accident at TMI in particular. The commission's report drew upon social technologies of organizational analysis, community studies, risk assessment, human factors research, institutional and decision analysis, public opinion research, and the sociology of science. The purpose was to add another dimension to the Commission's technical and legal view of the accident. Investigations following the TMI accident concluded that the nuclear power plant control room design failed to account for the human operator's strengths and limitations and that human inadequacies contributed significantly to the accident. The report noted: One may think of the accident at Three Mile Island as a social event by recalling the ambiguities and uncertainties in social relationships that it revealed. Included are the relationships of managers to operators; of managers to government regulators; of the utility company to the communities that surround the plant; of federal, state, and local officials to each other and to the private utility; and of the press and the audiovisual media to their readers and viewers. These are all complex and fragile role relationships, replete with uncertainties about rights, obligations and power. However, they are relationships that are more or less taken for granted until an unscheduled event exposes them to public and scientific scrutiny. Among the recommendations made by the committee for the purpose of improving some of the serious institutional flaws revealed by the accident was that accepted practices in human factors engineering should be identified and 64 Sills, David L., C. P. Wolf, and Vivien B. Shelanski. Accident at Three Mile Island: The Human Dimensions. 1982. p. 4. CRS-30 applied to the design of nuclear systems and control boards in order to minimize the system-induced errors. Malcolm Brookes, a contributing author to the Commission's report noted: Control room and system design at TMI do not represent the state of the art in human factors engineering as currently applied elsewhere (airplanes, military). Thus, it appears that the ambiguity, inadequacies, and errors of system instrumentation and design were primarily responsible for the confusion and malfunctions which occurred. The system misled the operator instead of vice versa. The Commission recognized the unsatisfactory condition of social science Rnowledge in the field of energy and proposed a sustained program of energy related social research and training. Included in such research, the Commission recommended behavioral and institutional analysis of regulatory structures and measures, not just for acute episodes such as the TMI accident but also for frequent exposures in occupational and environmental settings (i.e., management of toxic and hazardous substances.) " . . . High on the agenda of needed research is a general social science of regulation, building on the work of economists."66 Research areas include the occupational culture of reactor operators, social preferences toward nuclear-energy policies and technologies, and public acceptance of a nuclear-or alternative energy future. A major recommendation made by the commission was for societal assessment of nuclear technology and management of its risks. There were major points of convegence on the recommendations from the authors commissioned by the Social Science Research Council and the recommendations from the Kemeny Commission and the Nuclear Regulatory 65 Ibid., p. 224. 66 Ibid., p. 229. CRS-31 Commission (NRC). The Kemeny Commission concluded that the accident resulted from operator error, precipitated and compounded by flaws in system design.67 The NRC's final report held similar views. As a result of all recommendations, the NRC created a Division of Human Factors Safety in the Office of Nuclear Reactor Regulation.68‘ In addition, a program was established in the NRC to examine control room design features of existing and proposed facilities. POSSIBLE FEDERAL ACTIVITY R&D funding, as it currently exists, focuses on development such as the highly mission oriented research in the Department of Defense or investigator- initiated basic research grants such as those funded by the National Science Foundation (NSF).69 In testimony before the House Science and Technology Committee's Task Force on Science Policy, Richard Pew, Principal Scientist, Bolt, Beranek and Newman Laboratories, proposed that research support also is needed at an intermediate level (applied research), to fall between these support categories. This intermediate level of support Pew describes would be for the application of principles of behavioral science to system design. He stated that: This is research that is grounded in a detailed understanding of the applied problem, but that can lead to data and models that have more 57 Ibid., p. 227. 68 Telephone interview with Daniel Jones, July 21, 1986. 69 U.S. Library of Congress. Congressional Research Sevice. Behavioral and Social Science Research: Reagan Administration. Issue Brief No. IB85l48, by Christine Matthews Rose, 1985. (continually updated). Washington, l986. 17 p. CRS-32 general applicability than the specific context in which the problem is initially defined.70 This research would focus specifically on human physical, physiological and cognitive characteristics, human preferences and human performance capacities and limitations with respect to equipment. This particular type of behavioral research could be most beneficial to the development of future technological systems for both the military and the commercial sector. Pew acknowledges that the NSF supports investigator-initiated research but there is no mechanism within the NSF to initiate research at the intermediate level he describes. I In order to effectively apply behavioral science to user-machine system design, Pew asserts, research must be able to construct predictive models of the human response to equipment. He has found that most design decisions depend on characteristics of human performance for which predictive models or data are either inadequate or simply do not exist. Pew sees a critical national need for applied scientific research examining the relationships between people and the equipment that is being utilized by our technologically-oriented society. He proposes the formation of an agency or unit, outside the military context, that is specifically chartered to support applied research on the relationship between people and equipment and that has the characteristics of the National Institutes of Health model of funding authority. In conjunction with stimulating research on specific areas of critical need, it would also identify generic data (national norms, i.e. body sizes) and analytic tools that are needed and would initiate projects to obtain them. Included in this research would be data on response to signals, memory capacity, and the speed and 70 Role of the Social and Behavioral Sciences. Written testimony of Richard Pew. i CRS-33 accuracy of performance with which simple devices are used. Eventually such an agency, possibly located within the National Bureau of Standards, could become a national repository for the collection of new data on these topics and the systematizing of existing data. The products resulting from research on this issue could directly and favorably impact on innovation, productivity and safety. Skeptics find little that is new is such proposals for Federal spending in support of social science. They note that much that is proposed is already done when needed by the Department of Defense and argue that when such work yields economic benefit, the private sector will readily undertake it. Their position implies that as such human factors research passes the market test, there will be little need for a Federal institute to support it. If creation of a data base in cognitive performance applicable to current and future systems is to be undertaken, it might involve the disseminating and utilizing of the results of DOD social science research. Research budgets in most Federal agencies are strained. However, the DOD is the largest source of funding for R&D in the Federal Government and is a major supporter of social and behavioral science research. The additional information obtained from this agency in analyzing human workload and human performance could be quite valuable in nondefense related work. In testimony before the Committee on Science and Technology on the Role of the Behavioral and Social Sciences, Douglas W. Bray, Chairman, Development Dimensions International proposed Federal intervention for maximizing the effectiveness and productivity of U.S. industry. Such proposed Federal support CRS-34 for research would provide for the collection of basic scientific knowledge in such areas as: (1) status of and trends in the abilities and motivations of various segments of the work force, particularly the managerial work force; (2) methods of analyzing organizational cultures and the influence of such cultures on the performance of individuals; and (3) experiments in cultural change.71 The complexity and magnitude of the basic research described by Bray would require a greater involvement by businesses and organizations than already exists. Changes might also be necessary in funding arrangements and standards for research grants to allow for the involvement of university-based researchers. Bray concludes that . . . "Organizations are willing and able to apply the results of such research, but they are unlikely to produce it. Governmental action is reqnired."72 Critics charge that adequate Federal support has been given social scientists, and what is at issue mainly is the problem of coordination of Federal efforts and dissemination of existing empirical data. In addition, critics maintain that social scientists have tried to be so much like the natural scientists that they have overlooked the real challenge of implementation. The applied research in the area of restructuring work organizations has raised more questions requiring basic research than it has answered. 71 The Role of the Social and Behavioral Sciences. Testimony of Douglas W. Bray. 72 Ibid. CRS-35 CONCLUSIONS Productivity measures are indicative of many influences, including changes in capital services, level of output, utilization of capacity, technology, organization of production, managerial skill, and the makeup and effort of the work force.73 Productivity growth is important because it can contribute to price stability and help to offset the effects of increases in hourly compensation on unit labor costs. In addition, gains in the rate of productivity growth also contribute to the U.S. balance of trade by making the Nation's goods and services more competitive in the international marketplace. If productivity of our leading industrial competitors continues to grow more rapidly, or even surpass ours, we might find it difficult to maintain our standard of living. Some contend that social science methodologies have proven their ability to increase national productivity. Other countries have borrowed from U.S. social science research, mainly in regard to organizational structures and management styles, in order to gain economic advantages. Caution, however, is voiced by Maccoby in his testimony before the House Science and Technology Committee on the Human Factor in Innovation and Productivity. He noted that in an attempt to produce scientific results, paralleling the methodologies of the "hard" sciences, some social scientists have produced a lot of meaningless research. He concluded that, "Concrete collaboration with other sciences, each bringing their contribution to solve complex problems is today the challenge 73 U.S. Department of Labor. Bureau of Labor Statistics. Trends in Multifactor Productivity, 1948-1981. Bulletin 2178. Washington, U.S. Govt. Offo, ‘po 30 CRS-36 and the new opportunity of this (sic) social sciences."74 Policy makers are variously urged to consider measures to strengthen the organization of domestic resources and provide incentives to industry and Federal, State and local governments to develop, market, disseminate, and above all, to utilize different product-enhancing social and managerial technologies. Skeptics generally see selected government applications of social science as appropriate for government workforce and procurement (eg. the military, NASA, executive departments, etc.) but believe the market best equipped to motivate, select and fund social science applications is in the private sector. Another related public policy consideration is Federal support for the social sciences. In fiscal year 1980, 4.5 percent of Federal obligations for total research went for the social sciences. The FY85 estimate is approx- imately 3.0 percent.75 There is limited data on the amount of funding in the sciences allocated to human factors research. The Human Factors Society, Santa Monica, California has not compiled figures, public or private, on the amount of funding in this discipline. Stanley Deutsch, Study Director, Committee on Human Factors, National Academy of Sciences, indicated that the Committee has yet to collect data on the amount of funding in human factors research.76 From the limited data available, it is known that in the Department of Defense FY86 R&D budget of $35.0 billion, $64.7 million was directed toward human 74 Human Factor in Innovation and Productivity, p. 43. 75 National Science Foundation. Division of Science Resources Studies. Federal Funds for Research and Development, Fiscal Years 1967-1985. p. 92-93. 76 Telephone interview with Stanley Deutsch, Feb. 1986. CRS-37 factors research.77 Of that amount, approximately $12.1 million was for the support of basic research.78 Industry, academia and foreign sources contribute much (but unmeasured) useful human factors research. Congress may want to examine whether increased Federal support for research on the social ‘dimensions of an increasingly technological society is needed, and if so, where it should be done. The Economic Recovery Tax Act of 1981 provided tax credits to corporations for most kinds of new research. The intention of the Economic Recovery Tax Act was to increase technological innovation and productivity by stimulating private sector R&D. However, this act explicitly excluded social science research. There was congressional concern that the tax credit not be available for expenditures which were not truly R&D in nature and which would not focus on fundamental improvements in products or processes.79 The restrictions in the legislation consequently eliminated marketing-oriented R&D and similar sociological/demographic studies to be counted as qualifying research. with the exclusion of the social sciences as "qualified research,’ the tax credit is not applicable to areas of research that may have the potential to revitalize the economy and promote technological growth. During debate on the extension of this tax, Congress may consider proposals to amend the expiring provisions to include behavioral and social science research as qualifying for tax credit. 77 Telephone interview with Paul Chatelier, Dept. of Defense, May 5, 1986. 73 Ibid. 79 Research and Experimentation Tax Credit, p. 710. zit’? ‘Tat?-1:.