Scientific Grant Funding
This chapter provides an overview of grant funding as an innovation policy tool aimed at both practitioners and science policy scholars. We first 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, as well as approaches for creating incentives for risk-taking and translation for grant recipients. We argue that, in making these choices, policy-makers should adopt 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, we close with a call for increased rigor in the evaluation of grant programs. By adopting randomized controlled trials and other quasi-experimental techniques, policy makers can both communicate and improve the impact that grant programs have on discovery and innovation, thereby creating a stronger justification for their expansion or continued existence.
Send correspondence to email@example.com. We thank Ben Jones, Bhaven Sampat, and Austan Goolsbee for useful suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.