Prof. Andrew W. Lo says: "Very often when you're focusing on just one disease, by itself, it may not be economical to develop the particular therapeutic. But if you combine multiple diseases into a single financial portfolio, all of a sudden the risk-reward trade off becomes more attractive. If you can put together a large number of projects that are statistically independent — that their success and failure have no bearing on the other successes and failures — that's the best way of reducing risk in a portfolio."

In a 2021 study, for instance, three academics including [Prof.] Andrew Lo looked at what happened to innovation when drug companies were no longer able to resort to one of their favorite tactics: paying generic makers to stay off the market, known as "pay-for-delay." A 2013 Supreme Court ruling had essentially barred such agreements. What the researchers found was that companies actually responded by increasing their research and development spending to find new drugs.

New research published in the inaugural issue of the academic journal Collective Intelligence suggests that evolutionary forces may be fueling collective tendencies to discriminate.

New MIT research forecasts the effect of various two-dose vaccine allocation strategies on the cumulative number of infections and deaths in the U.S.—quantifying the impact of prioritizing first versus second doses. The forecasts suggest that allocating more than 50% of available doses to individuals who have not received their first dose can significantly increase the number of lives saved and significantly reduce the number of COVID-19 infections.

Retirement investors have never had it so good. For a decade now individual retirement accounts and company 401(k) plans have been booming thanks to the stock market’s giddy rise.

But before we start to get complacent, or think this is normal, here comes a timely new warning. And it comes from beyond the grave, from the late, great Vanguard founder Jack Bogle—one of the champions of the Mom and Pop investor and buy-and-hold index investing. Bogle died in 2019.

The typical life cycle of a drug from the laboratory to the clinic and, finally, to patients is long and fraught with obstacles. There is a significant bottleneck — known as the Valley of Death — when lack of funding prevents ideas from moving from the university into the market.

Andrew W. Lo is an economist by training and trade. While studying the drug discovery cycle for personal reasons, he was baffled by the concept of the Valley of Death. From the perspective of an economist, as he explains, “I always assumed that if there’s a medical need and if there’s a good rate of return for treating it, the money will flow. So, if there’s a bottleneck, it must mean that there just aren’t enough good opportunities.”

When the MIT economist Andrew Lo came up with the concept of the hub-and-spoke model for the drug industry, it was to reduce the financial risk of developing drugs for rare forms of cancer.

VIDEO: Covid-19 may be a public health crisis, but has had real impacts on the economy. MIT’s Andrew Lo discusses what’s happened and why history suggests a financial boom may be in the future.

Biotechnologies born in the labs of MIT have been given priority review more often than other, similar life sciences innovations, according to a new study published in Nature Biotechnology.

When Covid-19 hit, a lot of bullish investors looked for lessons in the previous outbreak. But the comparisons may be misleading.

MIT has debuted a new platform designed to help the enterprise decide how to invest in cybersecurity.

By securely aggregating sensitive data from cyber-attacks, the SCRAM platform from MIT CSAIL can quantify an organization’s level of security and suggest what to prioritize.