Since the early days of space exploration, a debate has raged over one big question: Should we really be sending humans out into the cosmos, or just do it with robots?

Both visions have sound logic in their favor. Smart automated machines are relatively cheap and disposable and can operate continuously in harsh environments. Since the moon certainly qualifies as a harsh environment, and lunar operations would clearly benefit from continuous activity, robots might seem the most sensible option for scaling up a moon colony, particularly if the goal is a commercial operation. Certainly many smart people think that’s the best choice.

But humans have some advantages of their own. We’re better at thinking critically and adapting to unexpected challenges in new environments. The moon certainly qualifies as a new environment; while we can make assumptions and build in precautions for robotic systems on the moon, lunar exploration and development will undoubtedly require some quick thinking and adaptation in order to succeed.

So, with pressure growing to send humans to the moon, Mars and beyond, how do we decide whether the next space mission is one for humans or robots? And does the push to commercialize space operations suggest that robots are the most economically efficient way to develop the moon?

These questions won’t simply be answered by science and engineering—they will also depend on economics. In fact, the economic requirements of moon investments are extreme in themselves. Some quick calculations based on the kinds of industries likely to take off first—mining, tourism—suggest moon investors would need long-term rates of return of almost 10 percent from a mature lunar operation. High-risk startups, the kind that will seed the lunar economy, will aim for much higher; the venture investors now seeding space funds seem to expect internal rates of return in the neighborhood of 40 percent. That’s a high bar—which means economics is going to be crucial in making the decision.

Here are three insights economists can offer:

Comparative advantage

When economists try to figure out how workers with different abilities should best allocate their time, or how countries with different strengths should allocate their production resources to maximize the potential gains from trade, they use a principle called “comparative advantage.”

In a world where LeBron James and I decide who should play basketball and who should mow lawns, LeBron has an absolute advantage in both. He’ll be better than me at both activities. But comparative advantage is a different question. The money King James could earn from one more minute of basketball far outweighs his returns from one more minute of mowing lawns, so specialization according to comparative advantage tells us that LeBron should focus on playing basketball while I focus on mowing lawns. This maximizes the revenues we generate together.

Profitable commercial activity on the moon will require a mix of continuous operations as well as critical thinking and adaptation. While current robots are far better than humans at continuous operations, humans are (for now) better able to think critically and adapt to unexpected challenges. This gives humans the comparative advantage in tasks requiring critical thinking and adaptation, while robots have the comparative advantage in tasks requiring continuous operations. That means that moon operations that integrate humans and robots properly will create more opportunity for profit than all-human or all-robot operations. In that sense, to an economist, “humans vs. robots” is the wrong debate. The correct debate is: What’s the right mix?

Marginal profitability

Humans in space cost far more than robots in space. This is a popular argument against crewed missions and settlements. And it’s true—but it misses the “returns” half of the profit equation. The question an economist would ask is: “Does one more human increase the profitability of lunar operations by more or less than one more robot?”

If a purely robotic mission fails because the robots were unable to think critically about the mission and adapt to unexpected challenges, the mission might generate zero returns no matter how cheap it was. Zero divided by a small number is still zero. On the other hand, if a human is able to solve the problem and ensure the mission continues, then the human added value despite the additional cost. In other words, the success or failure of a commercial venture doesn’t depend on the costs alone. It depends on the final profits. So a human-in-the-loop moon mission with a higher rate of return is more attractive than a purely robotic mission with a lower one, even if the latter costs less—period.

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Government’s role

So, does it matter whether we use robots or humans?

Not really. The current debate over whether we should send robots or humans to the moon is off-target, at least to an economist. If the goal is to eventually commercialize the moon, we will need both. And whenever one more human will produce greater expected profits than one more robot, we should expect companies to want to send that human to space. While we may not be there yet, that does not mean we never will be. Indeed, because of diminishing marginal returns from investment in a single input and technological progress in human spaceflight, we should expect that point to arrive before too long.

But we should not underestimate the challenges to commercialization. Any mission, crewed or robotic, that cannot produce the required rates of return for investors will find itself in the dustbin before too long. Given the current limitations of robots and the high cost of sending humans to space, we shouldn’t be surprised if the near-term commercialization of the moon and beyond remains a stretch for purely private investors—and that governments should expect to continue underwriting the costs, or guaranteeing the benefits, for our nascent private lunar industries.

Q&A

We hosted a live chat on Reddit about the U.S.'s efforts to go back to the moon. See highlights from the conversation here.

If there’s one thing economics shows us, it’s that incentives matter. Profits are strong incentives for commercial enterprises, and governments will have a central role to play in supporting those incentives for lunar commercialization. This includes promoting robust intellectual property rights for internationally dispersed space ventures, offering more fixed-price contracts for space-based goods and services, and forming more public-private partnerships geared toward commercial lunar projects.

In fact, on several levels, economic principles suggest strongly that developing the moon isn’t an “either/or” proposition, but a “both/and” project. Just as we’ll need both robots and humans to develop the moon, we’ll need both private investors and governments working together to underwrite lunar economic development. Commercial development of the moon is possible and potentially profitable, but it won’t be easy or cheap.

Akhil Rao is an assistant professor of economics at Middlebury College.

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