Uncertainty and Individual Discretion in Allocating Research Funds

33 Pages Posted: 16 Jan 2024

See all articles by Anna Goldstein

Anna Goldstein

Prime Coalition

Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: January 2024

Abstract

There is a long-standing tradition in public research funding agencies of distributing funds via peer review, which aggregates evaluations of proposed research ideas from a group of external experts. Despite complaints that this process is biased against novel ideas, there is poor understanding of an alternative system that may overcome this bias: the use of individual discretion. Here, we conduct the first quantitative study of how individual discretion affects a research funding portfolio. Using internal project selection data from the Advanced Research Projects Agency-Energy (ARPA-E), we describe how a portfolio of projects selected by individual discretion differs from a portfolio of projects selected by traditional peer review. We show that ARPA-E program directors tend to fund proposals with greater disagreement among experts, and they also appear to prefer proposals described in reviewer comments as “creative.” These choices do not result in a significant tradeoff with short-term project performance, and they enable ARPA-E to fund more uncertain and creative research ideas, which supports the agency’s mission of pursuing novel ideas for transformational energy technology.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Goldstein, Anna and Kearney, Michael, Uncertainty and Individual Discretion in Allocating Research Funds (January 2024). NBER Working Paper No. w32033, Available at SSRN: https://ssrn.com/abstract=4694945

Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
5
Abstract Views
90
PlumX Metrics