Spending Wisely? How Resources Affect Knowledge Production in Universities

Abstract

Every year billions of dollars are spent on research grants to produce new knowledge in universities. However, as grants may also affect other research funding the effects of financial resources on knowledge production remains unclear. To uncover how financial resources affect knowledge production we study the effects of research spending itself. Utilizing the legal constraints on university spending from an endowment we develop an instrumental variables approach. Our approach instruments for university research spending with time-series variation in stock prices interacted with cross-sectional variation in initial endowment market values for research universities in the United States. Our analysis reveals that research spending has a substantial positive effect on the number of papers produced, but not their impact.We also demonstrate that research spending effects are quite similar at private and public universities.

Bombs, Brains, and Science: The Role of Human and Physical Capital for the Creation of Scientific Knowledge

“…University governance significantly affects how changes in funding affect research performance (Aghion et al, 2010). An increase of university funding increases the number of published papers but not their quality (Payne & Siow, 2003;Whalley & Hicks, 2014). At the level of individual scientists, National Institutes of Health funding has only a limited impact on the research of marginal grant recipients (Jacob & Lefgren, 2011).…”

Production of output and ideas: efficiency and growth patterns in the United States

“…For example, the American Recovery and Reinvestment Act of 2009 (ARRA) has allocated 3 billion dollars to the National Science Foundation (NSF), representing an increase of 50% over the NSF's annual budget to 6 billion. Similarly, the ARRA has allocated 10 billion to the National Institute of Health, representing an increase of more than 30% of the NIH's annual budget to 30 Billion (Whalley and Hicks, 2014). The Israeli experience is also of interest because of its boomed high-tech sector and considerable government-financed R&D activity (Trajtenberg, 2002).…”

Influences of academic institutional factors on R&D funding for graduate students

“…While at a higher organizational level and more distant to the student than the graduate program, we argue that university ranking and the type of institutional control not only signal research quality, but also the relative capacity to provide resource support. In particular, a relatively nascent stream of literature has focused on the role of institutional control on research output finding private institutions to be more equipped to secure and support research than public universities (Aghion et al 2010;Whalley and Hicks 2014).…”

“…Given the constraints that many programs-especially within public institutions-face, the GRFP can serve as a pivotal funding source. If private institutions remain the disproportionate beneficiaries of GRFP funding, the gap in the ability of private and public institutions to support researchers is likely to widen (Aghion et al 2010;Whalley and Hicks 2014).…”