Pork Barrel or Barrel of Gold? Examining the performance implications of earmarking in public R&D grants

Abstract

Scholars tend to assume that publicly funded R&D projects, which are competitively selected, outperform projects, which receive funding through a political selection process. In this paper, we empirically explore this assumption, examining the outcomes of 321 R&D projects that were funded by the U.S. Department of Energy's Hydrogen Program. Between 2003 and 2011, projects in this program could not only receive funding by means of a competitive selection process, but also by being earmarked by a U.S. member of Congress. We find that, whereas earmarked projects receive considerably lower peer review evaluation scores than non-earmarked projects, they do not consistently underperform in terms of the productivity, spillovers, and novelty of research- and science-based outcomes. Post-hoc analyses provide indications that this misalignment is driven by the existence of a bias of peer reviewers toward earmarked projects. Jointly, our findings challenge the dominant assumption that competitively selected projects always outperform politically selected ones in the setting of public R&D grants. In this way, we provide academics and policy makers with a richer perspective on the advantages and liabilities of earmarks.