"How Economics Shapes Science"

I recently finished a very interesting and useful book entitled, “How Economics Shapes Science,” written by the economist Paula Stephan (Professor of Economics, Georgia State University and a member of the National Bureau of Economic Research). Stephan is an economist who accidentally became an expert in science economics, a little vignette that sets a nice tone for the book, which is superb overall — well-written, smartly structured, and well-referenced. In fact, for the serious reader, I’d recommend ordering it in print because the ability to flip back and forth between the nicely designed and very usable notes pages and the main text is vital to enjoying the book.

While the topic is of inherent interest to anyone working in the sciences, Stephan also touches on many points of particular interest to publishers, including why authors publish and related issues.

Stephan’s main point is that while the information emanating from research activities is itself hard to take to market — it is non-rival and non-excludable — the economic units of value to scientists are prestige and priority. These aren’t new ideas at all, but Stephan is able to bring data together to underscore how vital the incentives of prestige and priority are — they determine what happens to scientists, from lab space to letterhead.

There are many interesting themes in the book, from the way university research changed with the 1982 Bayh-Dole Act (which gave universities new control of patents and other IP emanating from federally funded research), to the proliferation of prize-based science, to the growth of the mega-foundations like HHMI and Wellcome, to the sometimes dramatic effects funding decisions can have, both when it grows and when it shrinks.

Perhaps the most interesting story in this story-packed book is the tale of the years 1998-2002, when the NIH budget doubled. This vast influx of funding had many unanticipated and some unproductive outcomes:

  • Success rates for R01 grant applications didn’t rise, and in fact fell significantly by 2009
  • Universities used the funding to justify a building binge, partly to lure prime faculty and partly to create capacity for the anticipated grants
  • Grants grew in size, and absorbed more costs, like graduate student tuitions and other overheads
  • The short-term nature of the doubling, combined with the long-term nature of the resulting grant commitments, created a dearth of money in subsequent years, as funding fell yet remained tied to previous commitments
  • The NIH took monies away from R01 grant-making during the expansion to pursue other, larger initiatives
  • Younger researchers suffered more, as renewing grants did better overall during both the funding boom and the subsequent cuts
  • The number of papers resulting from the doubling of NIH funding remained stubbornly unaffected — as one study put it, “Wherever the funds went, they left no clear scientific record.”

This is the kind of rich, data-driven, and nuanced discussion of science and economics readers can expect throughout Stephan’s excellent book.

Stephan addresses how R&D spending is often driven by politics — either geo-politics (the Cold War) or personal politics (biomedical research), and how jobs in the sciences respond accordingly (and how competitive options for smart people have affected job uptake). She also talks about how difficult science and research spending is to measure from an economic efficiency perspective — essentially, because payback on investments can be quite indirect and take decades, choosing between investment options is fraught with the chance for mistakes. And the emerging trend showing that higher-impact science comes from funding entities that evaluate people instead of projects and provides longer-term funding is also covered.

Many of the studies Stephan had to work with are dated, unfortunately, suggesting strongly that we need to do more (and more current) studies of these issues. It’s clear that economics shapes science. This becomes clearest at the end of the book, in a chapter entitled, “Can We Do Better?”. Here, Stephan writes sentences that bristle a bit:

In many ways universities in the United States behave as though they are high-end shopping malls. . . . faculty “pay” for the opportunity of working at the university, receiving no guarantee of income if they fail to bring in a grant. . . . The system that has evolved discourages faculty from pursuing research with uncertain outcomes. . . . The current university research system in the United States also discourages research that could disprove theories.

This book will have a special place on my shelf, as one of a handful of books that demand to be revisited, referenced, and re-read because there is so much clear and important information to be had, and some definite criticisms of the current system policy-makers need to consider.

(Editor’s note: An interview with the author was published with this review.)

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Kent Anderson

Kent Anderson

Kent Anderson is the CEO of RedLink and RedLink Network, a past-President of SSP, and the founder of the Scholarly Kitchen. He has worked as Publisher at AAAS/Science, CEO/Publisher of JBJS, Inc., a publishing executive at the Massachusetts Medical Society, Publishing Director of the New England Journal of Medicine, and Director of Medical Journals at the American Academy of Pediatrics. Opinions on social media or blogs are his own.


16 Thoughts on "Review: "How Economics Shapes Science," by Paula Stephan"

That does sound fascinating. It’s a real shame that book with such obviously broad appeal was published with a university press, and so costs three times as much as it would have with a mainstream publisher.

Well, actually I find that the fact that Harvard University Press published this adds to it’s credibility. The hardcover is currently avalaible from Amazon for $ 35 and change, which is within the price range of other books on related topics from a variety of publishers

Surely credibility comes from authors, not publishers?

On pricing: I’d compare a book like this, on how economic and societal pressures are affecting the way things are done on the Internet, with a similar-sized book on similar topics, such as Clay Shirky’s Here Comes Everybody: The Power of Organizing Without Organizations. I suspect that How Economics Shapes Science has more substantial points to made. But when Shirky’s book costs less than 1/3 as much, that’s the one that everyone’s going to be reading.

Which is a shame.

Welcome to the world of niche publishing. Shirky is a widely known figure. His book addresses subject matter that is of interest to a large audience (anyone interested in the internet, social media, crowdsourcing, business, copyright, etc). His book has likely sold tens of thousands of copies (if not more) in the four years it’s been out.

Stephan’s book is a written for a much smaller audience, people interested in the mechanics and economics of science. I would be surprised if it sells one tenth of the number of copies as Shirky’s book.

Both books likely cost the same amount to produce, so in order to recoup those costs from predicted sales, the specialist book that’s going to sell fewer copies requires a higher retail price. That’s pretty common for university presses and other publishers selling technical material to small groups.

Interesting that you bring up Shirky though, given that he’s recently been declaring that the crowdsourcing process has been hijacked and is no longer useful for innovation:

Credibility is apparent from author identities only when one knows who they are. As a biologist, I don’t know anything about Paula Stephan or her institution (no doubt Dr. Stephan can make exactly the same statement about me). In such a situation, the fact that the book was published by a prestigious university press helps with its credibility. This also increases the chance that it will be reviewed by reputable journals (or sites such as this), which increases the chance that readers such as myself will hear about it and (if the reviews are good) purchase it.

I have no idea where the part about “…and so costs three times as much as it would have with a mainstream publisher” in your post comes from, but I think you’re comparing apples to oranges. Many of the books university presses publish, and which we review here at CHOICE, do carry very high price tags…although even then, one might say, high “compared to what, the latest iPhone for example?” They are also books that “mainstream publishers” (another term that needs better definition) would never publish due to the limited size of the audience. Such books will necessarily carry high prices unless subsidized. The alternative is not to publish them.

But when university presses publish books with broader appeal, as has happened here, my experience is that their prices are quite comparable to prices for similar titles from “mainstream publishers”.

“It’s a real shame that book with such obviously broad appeal was published with a university press, and so costs three times as much as it would have with a mainstream publisher.”

Surely some mistake? As a publically funded academic, should she not have been required to make her work freely accessible on t’internets? Or get some big Foundation to give copies away for “free”?

The comments posted here once again prove the thesis that economics shapes everything, including science and the publication of economics books on science.

Kent, could you clear one point for me? You wrote that Stephan concluded; “The number of papers resulting from the doubling of NIH funding remained stubbornly unaffected…”

When I look at the PubMed database for the number of clinical trials published by American authors during this period I get the following numbers (Note: I started in 1999 assuming that it takes several years for a study to be completed):

1999 – 7,196
2000 – 7,152
2001 – 6,854 (there was a global decline in the number of papers published in 2001)
2002 – 6,879
2003 – 7,961
2004 – 8,865
2005 – 9,456

While it is true that the number of papers was fairly static during the funding period, there was a significant increase in 2003, 2004 and 2005. These figures would be consistent with the assumption that it would take several years for the increased funding of research to show up in the number of papers published.

Also, I think it important to note that while Europe and Japan experienced a relative decline (as a share of global research output) the United States continued to produce between 26% – 28% of the global total during this time period. How did Stephan reach the conclusion that the number of papers published by US researchers was not impacted by the increased funding?


First off, buy the book and read it. It’s right up your alley, and I’m only going to do your homework so often!

One study Stephan based this finding on was by Sacks and published in the Scientist in 2007. He found no upward jump in papers published because of the doubling in NIH funding relative to those from non-US labs. So, an increase occurred, but it wasn’t remarkably different from that achieved by countries that didn’t have a similar doubling of funding.

Also, Stephan points out that universities used the funding to expand — there was a lot of building, not a lot of new research. Another factor was that grant requests got bigger in addition to being more numerous, soaking up the increase to some extent. And once the doubling ended, the obligations created during it extended into the lower-budget years, depriving those years in proportion.

When you get the book, turn to page 141 and start reading.

I am on a plane to China tomorrow. This sounds like a perfect book to pass the time away.

But in fact there was a 50% increase in papers from the US. While it is true that the global count increased at a similar rate, the global increase could be mainly attributed to the US and East Asia (excluding Japan). Research funding in Japan was cut during this time period and there was a consequent dramatic decline in the number of papers from Japan.

You are right I have to read the book, it is indeed right up my alley.

I would be interested in how Mark Danderson did the PubMed search that resulted in those numbers. It is notoriously difficult to cull this sort of information from PubMed (since it depends on the author affiliation field and, unfortunately, only the affiliation of the first named author is available in PubMed). Also, not all records contain information about whether or not the study was funded by NIH funding – at least, not in the years 1998- 2002 (and not reliably now, even). I think the studies in the book may be a better indicator of the impact of NIH funding on publication.

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