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Stephan.pearc17.How Economics Shapes Science

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Stephan.pearc17.How Economics Shapes Science

  1. 1. How Economics Shapes Science Paula Stephan Georgia State University and NBER PEARC17 New Orleans July 10, 2017
  2. 2. Overview • Economics is about incentives and costs • Talk about how incentives and costs shape practice of science at research institutions, especially universities • Do so by providing – Examples of how incentives and costs affect practice of science – Perspective on some of the unintended consequences of the system that have evolved Paula Stephan Georgia State University & NBER
  3. 3. Examples of How Incentives and Costs Affect Practices in Science Paula Stephan Georgia State University & NBER
  4. 4. Where Research Is Submitted • Number of countries have adopted policies to encourage researchers to publish in top journals • Divide countries into ones that have adopted policies where – Institution is rewarded – Individual is rewarded with cash – Individual is rewarded with career advancement – No policy change Paula Stephan Georgia State University & NBER
  5. 5. Response to Incentives to Publish in Top Journals: Submissions by country policies to Science Source: Franzoni, Scellato, Stephan, Science (2011) Paula Stephan Georgia State University & NBER
  6. 6. Acceptances and Success Rates • Analysis shows that incentives are positively correlated with number of articles published. – Incentives that matter are those related to career advancement; neither institution-based incentives nor cash incentives to individuals are significantly associated with publications. • Results also suggest that acceptance rates are negatively correlated to cash bonuses. – They are not significantly related to other kinds of incentives. Paula Stephan Georgia State University & NBER
  7. 7. Salary • Faculty salaries in US depend upon institution, field, productivity and professorial rank • Faculty know there are wide differences and behave accordingly, often moving in response to salary offer or getting institution to match offer • Given concentration of resources at elite, private institutions, leads to greater inequality in earnings • See in terms of rising Gini coefficients Paula Stephan Georgia State University & NBER
  8. 8. Gini Coefficient by Field, Rank and Year Paula Stephan, How Economics Shapes Science 2012 Paula Stephan Georgia State University & NBER
  9. 9. Conclude With but few exceptions, Gini coefficient, while under .25 has more than doubled in 33-year period in academe Paula Stephan Georgia State University & NBER
  10. 10. Compared to US • By comparison, for full time male earners during same period in US, Gini grew by 35%, going from around .314 to .424. • Conclude: income inequality is greater in the larger society but it has been growing faster in academe. Paula Stephan Georgia State University & NBER
  11. 11. Costs Affect Use of Mammals-- Mostly Mice Of Mice and Women: Wald and Wu 2010; data collected by Zucker and Beery Paula Stephan Georgia State University & NBER
  12. 12. Of Mice and Gender • Why are male mice more commonly studied than female mice? – Only in reproductive studies and immunology is ratio of female subjects to male subjects greater than one. • Costs are a factor: four-day ovarian cycle of female mice means researchers must monitor females daily in experiments where hormones may play a role. Paula Stephan Georgia State University & NBER
  13. 13. Costs Affect When Equipment Used • Large Hadron Collider – Near Geneva – Cost of electricity in Switzerland depends upon use--highest in winter • Means LHC generally is not run in winter • Winter shutdown provides window for maintenance and upgrade Paula Stephan Georgia State University & NBER
  14. 14. Incentives and Costs Affect Staffing of Labs at Universities
  15. 15. Incentives • Increased importance of – Specialization in research – Funding for research – Publications as necessary condition for funding and continuation of funding Paula Stephan Georgia State University & NBER
  16. 16. Specialization • Sole author is dinosaur when it comes to research—fewer than 15% of papers are now sole authored – Reflects specialization that is occurring in scientific research • Specialization means faculty increasingly look for individuals to work with them on research and to staff their labs Paula Stephan Georgia State University & NBER
  17. 17. External Funding Important to Universities High-end Shopping Mall Model • Business of building state-of- the art facilities and reputation that attracts good students, good faculty and resources • “Lease” facilities to faculty in form of indirect costs • Faculty “pay” for opportunity of working at university, by writing salary off grant • Those in soft money positions receive no guarantee of income if they fail to bring in a grant
  18. 18. Faculty and Funding • Faculty increasingly under pressure to bring in funding for research • University provides start up package at time of hire to provide funds for lab, including funds for graduate students and postdocs • After three to four years faculty member is on her own to cover these expenses plus write-off part of her salary on a grant • Funding absolutely essential for promotion and tenure • Pressure to bring in funding even more acute for faculty in soft money positions— “funding or famine” to quote Stephen Quake • Tenure not equivalent to salary guarantee at majority of medical schools – Tenured faculty at Harvard Medical School write off 95% of their salary on grants • At same time, funding is in short supply and success rates are declining Paula Stephan Georgia State University & NBER
  19. 19. NIH and NSF Success Rates Available Years 0 10 20 30 40 50 60 70 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1970 1975 1980 1985 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 %SuccessRates Nih Success Rates NSF Success Rates NSF rates for 1952-1968 are for the Division of Biological and Medical Sciences Paula Stephan, Georgia State University and NBER
  20. 20. Key Role of Funding • Raises importance of having other people to work in lab—PI’s time is diverted to grant preparation/grant administration – Estimate that PIs on Federal grants spend 42% of research time on in grant-related administration (Kean) • Raises importance of publications given key role publications play in grant review and grant success Paula Stephan Georgia State University & NBER
  21. 21. Staffing of Labs • Forces of specialization, funding and importance of publications lead PIs to seek clever individuals to staff their labs and help in production of research • Three groups to choose from: – graduate students – postdocs – staff scientists • This is where costs play a large role Paula Stephan Georgia State University & NBER
  22. 22. Cost of a Graduate Student • Stipend between $24,000 to $36,000. National average $26,078* – Can cost an additional $16,000 or more once tuition is included, depending upon limits set by funding agency and policies of university • GRAs work approximately 1600 to 2500 hours per year, depending upon year and discipline • Hourly rate is around $19.50, assuming cost of $42,000 and hours of 2150* • Hourly rate can be as high as $27.50 on some other campuses before fringes *https://www.glassdoor.com/Salaries/graduate-research-assistant-salary-SRCH_KO0,27.htm Paula Stephan, Georgia State and NBER
  23. 23. Cost of Postdoctoral Scholars • NIH stipulated rate for FY 2016 was $43,692 for NRSA first-year postdoctoral scholar; up from $42,840 in 2015; $39,264 in 2013. – Many institutions follow this rate for other postdocs • Average postdoc reported working 2650 hours a year in life and physical sciences; 2550 in engineering and 2500 in math and computer sciences • Hourly rate before fringes is currently about $16.50 in the biomedical sciences, about $17.50 in computer sciences Paula Stephan Georgia State University & NBER
  24. 24. Cost of Staff Scientist • Start at approximately $60,000 • Fringe benefits are significantly higher than those for a postdoc because they are treated as employees by university • Hourly rate of approximately $30.00 before fringes Paula Stephan Georgia State University & NBER
  25. 25. Which Would You Choose? • Staff scientist: $30.00 per hour minimum • Postdoc: $16.50 to $17.50 per hour • Graduate student: $19.50 to about $27.50 depending upon tuition; – hourly rate may be lower for more advanced students who work more hours
  26. 26. Stephen Quake’s Lab: Stanford University Paula Stephan Georgia State University & NBER https://quakelab.stanford.edu/
  27. 27. First Authors article in Science: N=137 Postdocs 42% Grad students 30% student/postdoc 2% Other 26% Grant Black and Paula Stephan, 2012 Paula Stephan Georgia State University & NBER
  28. 28. Perspective on Unintended Consequences • The outcomes that result from the system that has evolved often have unintended consequences • Talk about three of these and the inefficiencies associated with them Over Training Risk Aversion Over Building Paula Stephan Georgia State University & NBER
  29. 29. Overtraining Paula Stephan Georgia State University & NBER
  30. 30. Overtraining: Supply of PhDs trained to do research who want to do research is greater than demand in certain fields Paula Stephan Georgia State University & NBER
  31. 31. Evidence of Overtraining Relative to Demand • Decline in definite commitments of new PhDs • Significant percent of those with definite commitments take postdoctoral position • Growth in non-research jobs Paula Stephan Georgia State University & NBER
  32. 32. Number of PhDs Growing Field 2004 2009 2014 All 42,123 49,553 54,070 Life sciences 8,813 11,403 12,504 Physical sciences* 6,047 8,324 9,859 Social sciences 7,043 7,829 8,657 Engineering 5,777 7,642 9,568 Education 6,635 6,528 4,793 Humanities 5,210 4,891 5,486 Paula Stephan Georgia State University & NBER *Growth concentrated in math and computer sicences; SED: Reported in Inside Higher Education https://www.insidehighered.com/news/2016/04/04/new-data-show-tightening-phd-job-market-across-disciplines
  33. 33. Many New PhDs Lack Definite Commitments at Time They Finish Paula Stephan Georgia State University & NBER
  34. 34. Doctorate Recipients from U.S. Universities: 2014 | www.nsf.gov/statistics/sed/ Definite commitments at doctorate award, by science and engineering fields of study: 1994–2014
  35. 35. Definite Commitments Overtime Field 2004 2009 2014 All 70.0% 69.5% 61.4% Life sciences 71.2% 66.8% 57.9% Physical sciences 71.5% 72.1% 63.8% Social sciences 71.3% 72.9% 68.8% Engineering 63.6% 66.8% 57.0% Education 74.6% 71.6% 64.6% Humanities 63.4% 63.3% 54.3% Paula Stephan Georgia State University & NBER
  36. 36. Many with Definite Commitments Will Go to Postdoctoral Training Paula Stephan Georgia State University & NBER
  37. 37. Doctorate Recipients from U.S. Universities: 2014 | www.nsf.gov/statistics/sed/ U.S. postdoc rate, by field of study: 1994–2014
  38. 38. Math and Computer Science • Definite commitments are highest in math and computer science at around 75% (2015 data) • Postdoc rate of definite commitments, which rose to 40% during Crisis, is now at 30%-- lowest among STEM fields (SED 2015) Paula Stephan Georgia State University & NBER
  39. 39. Why a Postdoc? • Other positions not available • Among recent physics PhDs 1 in 4 say “Could not obtain a suitable permanent position” is very influential in why they took a postdoc position • Next logical step Paula Stephan Georgia State University & NBER https://www.aip.org/sites/default/files/statistics/employment/phd1yrlater-p-14.pdf
  40. 40. People Who Aspire to a Faculty Position Are Likely to Take a Postdoctoral Position Paula Stephan Georgia State University & NBER
  41. 41. Majority of Postdocs Have Preference for Job in Academe Sauermann & Roach: “Why Pursue a Postdoc?” Paula Stephan Georgia State University & NBER
  42. 42. Positions are Scare: Academe is the “alternative” career track now Paula Stephan Georgia State University & NBER
  43. 43. Tenure and Tenure-track Positions 3-5 Years Since PhD • 10.6% biological, agricultural and environmental sciences; (17.3%) • 14.3% physical sciences; (18.8%) • 14.6% engineering; (22.7%) • 13.8% computer and information sciences; (55.7%) • 29.6% math and statistics; (54.9%) Red is 2013; Blue is 1993; Table 3-16 NSF Indicators. Paula Stephan Georgia State University & NBER
  44. 44. Employment Outcomes by Cohort Biomedical Sciences NIH Workforce Report, 2012
  45. 45. What’s Inefficient? Training in many fields has become less about future supply and more about getting research and teaching done now; in process we train more PhDs than will be able to use their knowledge and skills in research in the workplace Paula Stephan Georgia State University & NBER
  46. 46. Inefficiencies in the System Overtraining Risk Aversion Overbuilding Paula Stephan Georgia State University & NBER
  47. 47. Decline in Risk Taking • Perception among many scientists and policy makers that the appetite for risk taking among public funding agencies has declined or is sorely absent. • To quote Nobel laureate Roger Kornberg, “If the work that you propose to do isn’t virtually certain of success, then it won’t be funded.”
  48. 48. PNAS Article • Recent article by Bruce Alberts, Marc Kirscher, Shirley Tilghman and Harold Varmus in PNAS criticized the biomedical research in the US as being overly risk averse. • Recommended that “Science agencies should significantly increase the numbers and kinds of awards that emphasize originality and risk-taking…”
  49. 49. James Rothman, 2013 Nobel Laureate in Physiology or Medicine, Comments on Risk Rothman told interviewer that “he was grateful started work in the early 1970s when the federal government was willing to take much bigger risks in handing out funding to young scientists” “I had five years of failure, really, before I had the first initial sign of success. And I’d like to think that that kind of support existed today, but I think there’s less of it. And it’s actually becoming a pressing national issue, if not an international issue.” Nobel Laureate, Physiology or Medicine, 2013 Interview on NPR
  50. 50. “Goodbye, Columbus” • Gregory A. Petsko • Cornell Weill Medical School • “Explored” reasons why Columbus’s proposal “Finding a New Route to the Indies by Sailing West” was (hypothetically) rejected • Genome Biology 2012 13:155
  51. 51. Greg Petsko’s Take on Columbus’s “Hypothetical Rejection” • Too ambitious—suggest he go to Portugal, instead. • Lack of preliminary data • Failure would be disastrous for funder-- “think of how it would look if we funded something that didn’t pan out.” • Poor fit for reviewers: Experts (da Gamma and Magellan) too busy to review proposal • Limited funds – Funds are used for data collection (“Grape Vine Sequencing”) rather than hypothesis testing—data collection projects are “guaranteed to work”
  52. 52. Not Unique to Biomedical Research • A researcher at a major US institution recently stated, speaking of NSF funding: “Programs are not very adventurous.” • “And what I experienced was that I couldn’t get any new idea or anything I was really excited about funded by NSF. It never worked…the feedback is ‘well this is too new: we don’t know whether its going to work.’” • DARPA, which once boasted that “it took on impossible problems and wasn’t interested in the merely difficult,” has according to critics, increasingly shifted to funding research that is more near-term and less risky Paula Stephan, Georgia State and NBER
  53. 53. Incentives Promote Risk Aversion – Reviewers • Prefer proposals with convincing preliminary data: “no crystal, no grant.” • Short-term bibliometric measures, used by reviewers and funding agencies, favor non-novel research which is associated with risk aversion (see Blinkerred) – PIs • Importance of having funding: encourages submitting less risky research: one must have external support to keep lab going; university only supports lab for 3 to 4 years • Risk aversion fostered by fact that faculty need funding to support salary— mandatory for faculty on soft money and for tenure-track faculty at medical schools – Structure of grants • Short term nature of grants—hard to recover from “failure” in three years • Ability to continue a line of research—with higher probability of success – Stress on “translational” outcomes, both at university and at funding agencies Paula Stephan Georgia State University & NBER
  54. 54. Novel Research Takes Time to Be Recognized Bias Against Novelty, A cautionary Tale, Jian Wang, Reinhilde Veugelers and Paula Stephan, forthcoming Research Policy Paula Stephan Georgia State University & NBER
  55. 55. Journal Impact Factor Bias agains Novelty Bias Against Novelty, A cautionary Tale, Jian Wang, Reinhilde Veugelers and Paula Stephan, forthcoming Research Policy JIF Poisson JIF Poisson JIF Poisson Moderately novel -0.1055*** -0.1033*** -0.0839*** Highly novel -0.1811*** -0.1744*** -0.1352*** Journal age < 4 -0.3421*** Journal age (ln) 0.2211***
  56. 56. Why Should We Care? What’s Inefficient about This? • Major reason governments supports research is due to what economists refer to as “market failure” • Market failure discourages (most) firms from investing in risky projects—too difficult to capture the financial benefits • Yet it is risky projects that have the potential to shift the knowledge frontier and eventually contribute to economic growth Paula Stephan, Georgia State and NBER
  57. 57. A Caveat • Excellence and risk taking are not the same thing – Excellent research does not necessarily require risk taking – Risk taking does not guarantee excellent research outcomes Paula Stephan, Georgia State and NBER
  58. 58. Need of a Portfolio • Does not mean that there is not a substantial role for public support of “normal” research or what physicists in the 1980s referred to as “ditch digging.” • Need normal research to explore and exploit knowledge that is advancing the frontier; however, need to remember that “normal” research is what firms excel at Paula Stephan, Georgia State and NBER
  59. 59. Inefficiencies in the System Overtraining Risk Aversion Overbuilding Paula Stephan Georgia State University & NBER
  60. 60. Overbuilding • Doubling of NIH budget encouraged universities to build new biomedical research facilities— assumed NIH funding would continue to grow • Many universities borrowed to do so – Encouraged by government accounting rules which make debt an accounting asset • Interest university pays for debt service can be included in calculating indirect • Building binge further fuelled by competition among universities to recruit senior, high- performing faculty Paula Stephan, Georgia State and NBER
  61. 61. University Response • System provided incentives to train more individuals; especially because costs of using graduate students and postdocs to staff labs were low relative to staff scientists • Incentives to create research programs, built on soft money and prospects of charging salary off grants Paula Stephan, Nature 2012, from NSF data;
  62. 62. Debt • Buildings often built with debt • AAMC survey found – average annual debt service for buildings in 2003 was $3.5 million per medical school – grew to $6.9 million in 2008 • Where will the money come from? Paula Stephan Georgia State University and NBER
  63. 63. Summary • Incentives and costs affect the practice of science • They can lead to unintended consequences with inefficiencies – Overtraining – Risk aversion – Overbuilding
  64. 64. Drawn from Recently published in paper The Endless Frontier: Reaping What Bush Sowed?
  65. 65. Comments in Nature Paula Stephan Georgia State University & NBER Research Efficiency: Perverse Incentives Blinkered by Bibliometrics
  66. 66. Questions/Comments • Paula Stephan pstephan@gsu.edu

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