The idea behind prizes is rather simple: incentives matter. Offering the right incentives can lead to innovations that can change the world. The amount of money available for prizes has more than tripled over the last decade to an estimated $1–$2 billion, and the sector continues to grow rapidly.
Although hugely popular a century ago, interest in prizes declined during the 1900s, replaced in large part with grant funding. Grants have been credited with establishing the research centers and institutes of excellence that have been behind much of the rapid rise in innovation over the last 100 years. However, after a century of grant-funding cycles that have become ever more deeply entrenched in the complex relationship between funders and recipients, the connection between grant funding and innovation leaves room for improvement.
This article explores the rapid rise of prizes in recent years, and their appropriateness as a mechanism for encouraging innovation and achieving the Millennium Development Goals.