Nobel Laureate's Tour of China

Modern Traditional Chinese Medicine Will Have a Great Future

Eric S. Maskin, the Nobel economic laureate in 2007, attended the China Beijing International Fair for Trade in Services and delivered a speech in the Forum on Traditional Chinese Medicine Innovation in Science and Technology in May 29, 2016. Later, the China Radio International interviewed him on the topic of the relation between economics and modern medicine. The following is about the dialogue between Mr. Eric Maskin and CRI.

CRI: I have a distinguished guest in the studio, Mr. Eric Maskin, American economist and 2007 Nobel Prize winner for Eeconomics. He won the Nobel Prize for his work on Mechanism Design Theory, a special form of Game Theory that attempts to maximize gains for all parties within markets. I hope I have explained it correctly. Thanks for joining us, Mr. Maskin.

Mr. Maskin, this time you are here to attend a healthcare-related conference. I think a lot of people might just wonder what does an economist do at a medical forum. So please tell us about the event and the things you are doing there.

Mr. Maskin: Well, as an economist, I am interested in economic constitutions which can help promote medical technology. One important tool in medicine is the use of drugs or medicines in various kinds. These are typically expensive to invent. And if you want to invent a new drug, you have to put in an investment of time, energy and money. And so economists want to study under what circumstances inventors will be willing to make such investments. And that is what I talked about in the conference.

CRI: So what was the main idea that you gave in your presentation there?

Mr. MaskinThere is an old idea that in order to protect inventors from imitation, they need to be awarded some intellectual property rights, such as patents. If I have a patent in my discovery that prevents you from imitating, and so it helps me get back the investments that I’ve made in developing that invention. But in the talk, I was suggesting that there are some circumstances where patents can actually be counterproductive. And that was the main focus of my talk to say that in some kinds of industries we do not actually benefit as a society from awarding patent protection to innovators. We are better off if imitation can occur.

CRI: I know you are very famous for your theory on patents. You suggested that some patents will inhibit innovation rather than stimulate progress. I actually find your own words on Wikipedia, a magic website that patent protection may reduce overall innovation and social welfare. Here in China, we are all emphasizing the importance of patent protection, IPR protection. So you’d better give us some examples.

Mr. MaskinWell, let me say, first that I’m not arguing against all patent protection. But in some industries, innovation tends to be sequential. That means that each discovery builds on a last one, and in order to make progress, we have to take many small steps instead of a few big steps. In industries where innovation is sequential, then patents can actually interfere with innovation. If I’ve made a discovery, and I put patents on it that makes it hard for you to build on what I’ve done and take the next step because I can block your improvements. And that might be good for me, but it’s not going to be good for you and it may not be good for society, because society will be deprived of the improvement that you make on my discovery.

CRI: Yes, if I want to stand on the shoulders of a giant, it’s impossible. Because the giant won’t let you to stand on his shoulders. I can see that. But still for other people, it’s a reasonable demand that they get patented. How can you solve this conflict?

Mr. MaskinYou have to decide which industries are truly sequential, and which are not. If an industry does not involve sequential innovation, if it takes the form of unique big discoveries, then patent protection probably is important to safeguard innovation. But if an industry, and I think software is a good example of this,and maybe pharmaceutical also, if innovation is highly sequential, then patents might be a bad idea. So rather than having a policy where you always give patents or you never give patents, you need a more discriminating policy which distinguishes different industries from each other.

CRI: You are a Nobel laureate and we really want to understand your theory. Can you please explain very briefly in layman's term about your Game Theory? We want to learn, we want to know about it.

Mr. MaskinI’m contributed to a field, a part of the game theoretical mechanism design. In mechanism design, we start with some particular goals that we want to achieve, the society wants to achieve, then we try to figure out what mechanism, what game or what institution will best achieve those goals. I can give a little example if you like. Suppose that you have a cake, that you want to divide between two children. And your goal is to make sure that each child is happy with the piece that he or she gets. So first child prefers his own piece to the second child’s piece and vice versa. How do you achieve that goal? (Cut it in half?) That sounds good, but the problem is that you don’t know how the children do the cake themselves. So you might think you cut the cake exactly in half, but the children might disagree. How do you proceed if you don’t know how the children feel the cake? That’s mechanism design. So it turns out that there is a very simple but very ingenious solution to this problem. It’s called the Divide and Choose Mechanism where one child cuts the cake and the other child chooses which piece she wants for herself. And this works because the child who cuts the cake knows that the two pieces are unequal, the other child will take the big one.That’s the kind of idea that we use in Mechanism Design Theory —— how do you achieve a fare outcome or a desirable outcome when we don’t know how the participants themselves view the possibilities.

CRI: You participated in the 2014 World Nobel Prize Laureate Summit and gave a plenary talk at the meeting. What’s your memory about this event?

Mr. MaskinI was here in Beijing for the 2014 Nobel Prize Laureate Summit two years ago. And I met many Chinese traditional medicine doctors and scientists. I was impressed with the TCM theory and clinical practice. Last year Dr. Youyou Tu, a TCM scientist won China's first Nobel Prize on natural sciences. I do believe that modern TCM will join the main stream of world biomedical sciences and have a great future.

CRI: You’ve explained your theory in a very simple way, easy to understand, but sadly we don’t have enough time to go deeply into that. Thank you very much for your time here and for your views.

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