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New ideas for funding scientific research in areas of societal relevance – analyzing the co-evolution of research methods and financial tools

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  • FORAY Dominique

Abstract

This paper delves into the exploration of new financial mechanisms to fund scientific research, particularly focusing on its pertinence to societal challenges. Starting with a thought-provoking discussion on the limitations of traditional research grants and the prospect of introducing research impact bonds (RIBs), Foray scrutinizes the potential of financial engineering (FE) tools in the realm of public research tied to sustainable development goals. The paper discusses the complexities of aligning research funding with outcomes, navigating through the intricacies of unhedged uncertainty and the ambiguity of defining success in research. The paper provides a comprehensive review of various FE instruments, such as mega funds and impact bonds, and their applicability to scientific research funding under certain conditions. The author outlines the challenges of preregistered research in the context of RIBs, the diversification of risk through mega funds for projects with commercial potential, and the use of prizes and advanced market commitments to shift the risk from funders to researchers.

Suggested Citation

  • FORAY Dominique, 2024. "New ideas for funding scientific research in areas of societal relevance – analyzing the co-evolution of research methods and financial tools," JRC Research Reports JRC139559, Joint Research Centre.
    • Handle: RePEc:ipt:iptwpa:jrc139559
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC139559
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    References listed on IDEAS

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    1. Michael Kremer, 2001. "Creating Markets for New Vaccines - Part II: Design Issues," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 73-118, National Bureau of Economic Research, Inc.
    2. Michael Kremer, 2001. "Creating Markets for New Vaccines - Part I: Rationale," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 35-72, National Bureau of Economic Research, Inc.
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