The Research Money Can't Buy: The Impact of Funding on Scientistss Research Behavior

Abstract

While corporations increasingly rely on academic science and greater financial resources are directed to academic research, we know little about how external funding affects the research direction and behavior of academic scientists. We explore this question by exploiting the unexpected decline in federal funding for human embryonic stem cell (hESC) research in the United States in 2001. We find little evidence that the policy change had a significant effect on U.S. scientists’ hESC output. However, U.S. scientists experienced a relative decrease in their output in other stem cell subfields. They were also more likely to move from academia to industry following the policy change. These results provide novel insights into how scientists strategically respond to funding policies to maintain their focus on research lines perceived more promising by their peers. We discuss how misaligned financial and reputational incentives may have important unintended consequences for those funding academic science.