
The Economic Impacts of the Advanced Encryption Standard (2018) [pdf] - todd-davies
https://nvlpubs.nist.gov/nistpubs/gcr/2018/NIST.GCR.18-017.pdf
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roenxi
Government at its best - they are claiming benefits from organising everyone
to use one easily available standard for encryption.

The claimed value seems very plausible. The alternative was presumably a world
more like the one where PGP's Zimmermann was being investigated for providing
strong encryption. There is a real opposition in the halls of government to
strong encryption and overcoming that is in itself praiseworthy.

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ShorsHammer
For the discerning modern information consumer turned off by the 149 page
format, here's a similarly dry reproduction in bitesize form:

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Net Present Value of Benefits 1996 (NPV96):

Most Conservative Outcome: $844,500,000

Ranges for Other Infratechnology Impact Assessments: $3,500,000 - $773,000,000

~~~

Net Present Value of Benefits 2017 (NPV17):

Extrapolated Outcome: $8,772,000,000

Economy Wide Extrapolated Outcome: $250,473,200,000

~~~

Benefit to Cost Ratio (B/C):

Most Conservative Outcome: 29/1

Ranges for Other Infratechnology Impact Assessments: 3‐113/1

~~~

Table ES-1. Economic Impact of the AES program, 1996-2017

~~~

Table ES-1 summarizes the quantitative findings of this economic impact
analysis in terms of Net Present Value (NPV), Internal Rate of Return (IRR),
Alternative Internal Rate of Return (AIRR), and Benefit-to-Cost ratio (B/C).
Looking only at the column of Table ES-1 entitled “Most Conservative Outcome,”
based on the information discovered in the survey conducted for this project,
in 1996 NIST AES program managers would have valued the AES program at
$844,500,000, net of costs incurred. By comparison, of 12 other NIST infra-
technology projects for which NPV was calculated (1999-2011), the median net
present value was $48.5M, and ranged from $3.5M – $773M.

The same logic applies to the IRR metric, the AIRR metric, and the B/C metric.
A project has an acceptable economic impact if the IRR on the capital invested
exceeds the cost of capital. The Executive Branch Office of Management and
Budget stipulates the Government cost of capital for investment projects like
AES to be 7%. Clearly the AES program’s 81% IRR indicates significant impact.
Similarly, a program B/C greater than one has a sufficient impact to go
forward. The AES program’s B/C of 29/1 (the present value of benefits/present
value of costs) indicates that for every $1 of NIST’s investment, society
received $29 dollars’ worth of cost avoidance benefits.

Explanations of the economic impact metrics based on extrapolated estimates
(in the third and fourth column of Table ES-1) are discussed in the following
report. Although they show significant increases in the economic impact for
the AES program, they are nonetheless, as the report explains, lower bound
estimates of the true economic impact of the AES program.

The opening paragraph of this executive summary observes that about $40
billion annually is used Government-wide to support intramural research. The
AES program is an example of such intramural research. A very small part of
that $40 billion—about $2.7 million—was spent for the AES program in 2017,
close to the inflation-adjusted annual amount ($2.6 million) spent to support
the program over the years from 1996 through 2017. Thus, the annual intramural
Federal R&D spending for 2017 is almost fifteen thousand times greater than
NIST’s annual spending for the AES program. Now consider the success of the
AES program in that context and ask, “What would the annual return on
investment be if the collection of Federally funded intramural R&D investments
were as productive as the AES program?” For simplicity, imagine the
expenditure of $40 billion annually had continued indefinitely. The annual
yield on that $40 billion would have to be $72 billion to justify an internal
rate of return equal to the AES program’s 80%.

