“Scientific Grant Funding”, 2022-03 ():
This chapter provides an overview of grant funding as an innovation policy tool aimed at practitioners and science policy scholars. We discuss how grants relate to other contractual mechanisms such as patents, prizes, or procurement contracts, and argue that, among these, grants are likely to be the most effective way of supporting early-stage, exploratory science.
Next, we provide a brief history of the modern scientific grant and discuss the current state of knowledge regarding several key elements of the design of grant programs: the choice of program scope, the design of peer review, and approaches for creating incentives for risk-taking and translation for grant recipients. We argue that, in making these choices, policymakers might consider adopting a portfolio-based mindset that seeks a diversity of approaches, while accepting that high failure rates for individual projects is in fact part of an effective grant-making program.
Finally, increased rigor in the evaluation of grant programs is likely to raise the quality of funded proposals. In particular, randomized controlled trials and other quasi-experimental techniques might enable policymakers to communicate and enhance the impact that these programs have on discovery and innovation, thereby creating a stronger justification for their expansion or continued existence.
[Keywords: economics of science, innovation incentives, funding systems, grant funding]
…Throughout, we emphasize 3 themes.
grants, patents, prizes, and research contracts play overlapping and mutually supportive roles in the research-funding ecosystem, with grants most effective when research is exploratory, and when it is likely to produce ample spillovers, both across domains and over time. These two features characterize much early-stage scientific research.
grant programs must be designed in ways that recognize the possibility of failure. This entails encouraging recipients to take on scientific and technological risks, exploring new research avenues rather than sticking with safer and more conventional trajectories.
funding agencies could consider encouraging the systematic evaluation of grant programs by comparing outcomes among scientists, institutions, or fields that receive funding with those that accrue to “control” scientists, institution, or fields that do not.
… Grant systems also face implementation challenges. Scholars have noted the inefficiency inherent in a system where much of the effort sunk into writing unfunded proposals appears to be wasted (2019); they have commented on the unfairness of a system which disproportionately rewards individuals and institutions skilled at grantsmanship (2009), and within which female and minority applicants appear to fare less well on average than white, male, or Asian applicants (Ginther et al 201113ya); they have provided evidence that peer review sometimes filters out the most novel or creative proposals ( et al 2016), or worse, induces scientists to skew their agenda toward projects more likely to generate results in the short term ( et al 2011).
Why, then, do grants exist?
We argue that grants are likely to be the most effective—and feasible—way to fund basic research when two fundamental conditions simultaneously hold. First, when the social value of a scientific finding likely exceeds its privately appropriable value. Second, when specifying the parameters of a desired research solution ahead of time is impossible. These twin conditions would appear to characterize much exploratory and early-stage research that is often labeled “basic” or “pure.” We will also discuss two subsidiary arguments in favor of grant funding over alternative mechanisms: when potential research performers face financial constraints, and when investments take the form of general-purpose research infrastructure (as opposed to specific projects).
…As capital requirements increased over time, scientists began to seek public support. In Europe, financial backing took different forms, from the founding of science departments within long-established universities to the establishment of freestanding “intramural” research institutes—such as the Physikalisch-Technische Reichsanstalt in Germany (1982) or the Pasteur Institute in France (2010)—where teaching activities did not take place.
“Encouragements” from the French Academie des Sciences, 1831–191850174ya: The earliest recorded grant system was administered by the Paris-based Academie des Sciences following a large estate gift from Baron de Montyon [see also Montyon Prize]. Finding itself constrained in its ability to finance the research of promising but not-well-established savants, the academy seized on the flexibility afforded by the Montyon gift to transform traditional grands prix into “encouragements”: smaller amounts that could broaden the set of active researchers. Even though the process was highly informal (the names of the early recipients were not published in the academy’s Compte rendus), it apparently avoided suspected or actual cases of corruption (1989). Throughout the 19th century, however, the academy struggled to convince wealthy donors to abandon their preference for indivisible, large monetary prizes in favor of these divisible encouragements.
The Royal Society’s Experience, 1849–651914110ya: The “government grants” administered by the British Royal Society were another early precursor of modern grant systems. Over the 64 years of the program’s existence, 2,316 grants assisted the investigations of 938 scientists. In 1851, it accounted for about 50% of all the funds appropriated by the British Parliament in the aid of science, declining to 9% on the eve of the World War I, when it was terminated (MacLeod 1971). Although its grants were primarily awarded to members of the society located in and around London, the selection process eventually came to function like an early form of peer review. After facing initial accusations of bias, the society reformed its process, leading to the creation of discipline-specific committees with members elected to 4-year terms.
Ultimately, the Victorian-era government grant appears to have withered both because of its trustees’ ambivalence about expanding its scope (for fear that a more ample budget would invite the government to meddle in the Royal Society’s affairs) and because of the growing influence of universities. It would take 40 years and another world war to create a window of opportunity for reinventing the scientific grant, this time on the other side of the Atlantic.
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