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Subject: Information on NBER Appointment
I am writing to all NBER Health Economics Program members to provide some information about your appointment.. Almost all members of the Bureau research staff are Faculty Research Fellows (FRF) or Research Associates (RA). A FRF is an untenured assistant professor, while a RA is a tenured associate or full professor. A much smaller number of staff members are Research Economists (RE). This title is most commonly used for staff in foreign countries or for staff who do not have academic appointments.
An initial FRF appointment is made for a period of three years. After that staff members who show activity are retained and promoted to RA if they have been promoted to associate professor with tenure. Activity is based on participation in the Summer Institute, program meetings, and conferences; authoring papers in the NBER Working Paper Series; and submitting grant applications through the Bureau. Research Associates who are active participants in the work of the program receive an honorarium of $3,000. Faculty Research Fellows are not eligible for this benefit.
There are two advantages to you of funding research through the NBER.
(1). The Bureau allows you to fund three summer months and a day a week during the academic year. Most universities limit this to 2 or 2.5 summer months.
(2). The Bureau contributes 20 percent to a TIAA/CREF or Vanguard Funds Pension Plan. This method of making the contribution does not conflict with other limits on annual contributions.
The advantage to the Bureau is that it gets the indirect cost rather than the university. I know that this can be a problem because some universities want the indirect cost. It is an especially common issue if your academic appointment is in a medical school or a school of public health. But you may be able to argue that you have funded through your university in the past and that you get significant benefits via your NBER affiliation.
I think it is important to recognize that the Bureau provides substantial benefits to RAs and FRFs. It incurs costs when you put a paper in the Working Paper Series. Obviously, it also incurs costs when it funds your travel to conferences, program meetings, and the Summer Institute. Indirect costs on grants help to offset these costs.
The Bureau encourages funding through the federal government rather than through private foundations. There are two reasons for this. First, the federal grants contain a much higher indirect cost rate than private foundation grants. The Bureau's current indirect cost rate, which is set by the National Science Foundation, is 61.4 percent of wages, salaries, and fringe benefits. This is the rate on all NIH grants--the largest source of funds for health economics research. Private foundations, on the other hand, typically use an indirect cost rate of no more than 9 or 10 percent of total direct costs.
The second reason for encouraging federal funding is that NSF computes the NBER indirect cost rate as the ratio of wages, salaries, and fringe benefits on federal grants to total wages, salaries, and fringe benefits. Hence, the receipt of a private foundation grant lowers the NBER federal indirect cost rate.
An exception to the above is that Martin Feldstein has negotiated an indirect cost rate of 52.5 percent of wages, salaries, and fringe benefits with the Robert Wood Johnson Foundation. That is in addition to the 9 percent of total direct cost rate used by that Foundation.
A very modest amount of money is available in an unrestricted fund account allocated to the Health Economics Program to offset lost indirect cost and a lower federal indirect cost rate caused by the receipt of a private foundation grant. But, if you are thinking about submitting a grant, your first choice should be NIH, NSF, or RWJ.
If you need more information about funding possibilities or would like to discuss your ideas for grant applications, feel free to contact me. For help in preparing grant application budgets, contact Chris Nagorski, the NBER New York Business Manager (cnagorski@gc.cuny.edu or 212-817-7962) or Sue Colligan, Vice President for Administration and Budget (colligan@nber.org or 617-588-0306).
The information in this message is confidential for NBER researchers and should not be shared with others.
Michael Grossman
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