Contest models highlight inherent inefficiencies of scientific funding competitions

Scientific research funding is allocated largely through a system of soliciting and ranking competitive grant proposals. In these competitions, the proposals themselves are not the deliverables that the funder seeks, but instead are used by the funder to screen for the most promising research ideas. Consequently, some of the funding program's impact on science is squandered because applying researchers must spend time writing proposals instead of doing science. To what extent does the community's aggregate investment in proposal preparation negate the scientific impact of the funding program? Are there alternative mechanisms for awarding funds that advance science more efficiently? We use the economic theory of contests to analyze how efficiently grant proposal competitions advance science, and compare them with recently proposed, partially randomized alternatives such as lotteries. We find that the effort researchers waste in writing proposals may be comparable to the total scientific value of the research that the funding supports, especially when only a few proposals can be funded. Moreover, when professional pressures motivate investigators to seek funding for reasons that extend beyond the value of the proposed science (e.g., promotion, prestige), the entire program can actually hamper scientific progress when the number of awards is small. We suggest that lost efficiency may be restored either by partial lotteries for funding or by funding researchers based on past scientific success instead of proposals for future work.Scientists waste substantial time writing grant proposals, potentially squandering much of the scientific value of funding programs. This Meta-Research Article shows that, unfortunately, grant-proposal competitions are inevitably inefficient when the number of awards is small, but efficiency can be restored by awarding funds through a modified lottery, or by weighting past research success more heavily in funding decisions.Author summary: The grant proposal system compels researchers to devote substantial time to writing proposals that could have instead been used to do science. Here, we use the economic theory of contests to show that as fewer grants are funded, the value of the science that researchers forgo while preparing proposals can approach or exceed the value of the science that the funding program supports. As a result, much of the scientific impact of the funding program is squandered. Unfortunately, increased waste and reduced efficiency is inevitable in a grant proposal competition when the number of awards is small. How can scarce funds be allocated efficiently, then? As one alternative, we show that a partial lottery that selects proposals for funding randomly from among those that pass a qualifying standard can restore lost efficiency by reducing investigators' incentives to invest heavily in preparing proposals. Lotteries could also improve efficiency by compelling administrators to de-emphasize grant success as a primary measure of professional achievement. If lotteries are politically untenable, another remedy would be to fund researchers based on their previous research successes, although in such a way that avoids establishing barriers to entry for junior scientists or scientists from historically underrepresented demographic groups.