Marianna Mazzucato really believes, that bureaucrats and government agencies can ex ante know how to allocate economic resources efficiently. That's obviously delusional, because this kind knowledge never exists in a centralized shape and form. Rather it has to be discovered through the process of free market competition, as Hayek rightfully pointed out. People change, preferences change, prices change and the future is uncertain for everyone of us.
Many years ago, I was engaged by the Government of Canada for a project on improving competitiveness by having the government direct resources to target industries. The project team saw the issues early and the report was delivered with sparse content. We did have one anecdote. The federal government funded a startup near Ottawa -- a topless carwash. If you did not own a car, the firm would rent you one so you could ride it through the process/spectacle of bosoms, soap suds, and multi-directional water spray. The business forfeited on its funding, the government took ownership, and the business failed immediately. Picking winners is hard
A question that occurred to me while reading this: does the argument extend to thematic research funding more generally, or is the critique specific to Grand Challenges?
If funding themes systematically influence how researchers frame their work, define their fields, and allocate their attention, one could imagine similar dynamics emerging in many thematic programs, not just Grand Challenges. Where would you draw the line between productive direction and distortion of the research process?
The difference is largely one of degree rather than kind. O/c, ALL funding mechanisms shape incentives. Even disciplinary funding programs influence research agendas. The issue is therefore not whether research should be directed at all, but how much confidence policymakers and funders should have in their ability to identify productive directions ex ante. My concern is strongest when themes become very broad, politically salient/nstitutionally dominant. Grand Challenges are a particularly interesting case because they are often framed at a very high level of abstraction ("sustainability," "resilience," "inclusion"), they carry considerable normative and political weight, and they increasingly influence university strategies, evaluation systems, and funding priorities simultaneously. Then, the risk is that the themes begin to shape how scientific opportunities themselves are perceived and articulated. Researchers start asking not only "What is an important question?" but also "How can I connect this question to the currently recognized challenge?" So, I would say that Grand Challenges represent an extreme case of a more general phenomenon. The further funding priorities move from supporting broad scientific exploration toward organizing research around predefined societal missions, the more relevant the knowledge and incentive problems become.
One mechanism that deserves more attention is how researchers respond to funding and political signals. When a topic becomes strategically important, scholars naturally adapt. The result is often not only more research in the area, but also a gradual expansion of what the area actually means.
I saw a version of this in entrepreneurship research. When entrepreneurship became politically salient and funding followed, there was a noticeable increase in scholars identifying as entrepreneurship researchers. At the same time, the boundaries of the field expanded dramatically. Entrepreneurship came to encompass an ever wider range of phenomena, making the concept less distinctive and arguably less analytically useful.
This was a relatively small field. If such incentive effects appear there, one wonders what happens when entire research systems are organized around Grand Challenges. The concern is not opportunism but normal academic adaptation to incentives. Researchers learn to frame their work in the language that attracts attention and resources. Over time, the challenge itself risks becoming so broadly defined that almost everything can be presented as contributing to it.
This may be an unavoidable consequence of mission-oriented funding and is worth weighing against its potential benefits.
In that sense, Grand Challenges may not only direct research agendas. they may also reshape the categories through which researchers describe and justify their work.
)nteresting observation! I think you're pointing to a mechanism that is distinct from, but complementary to, the knowledge problem discussed in my pos: Indeed, researchers do not merely respond to incentives by shifting topics; they may also adapt the categories through which they define and justify their work. The entrepreneurship example is particularly suggestive because it illustrates how a field can expand as resources, legitimacy, and political attention increase. This has def happened to eship internationally. Ctegory inflation may make the field more attractive institutionally while simultaneously making it less analytically distinctive. Has this happened to eshp? Not sure. In any case, there seems to be a similar process at wrok with Grand Challenges. Concepts such as sustainability, resilience, inclusion, or wellbeing gradually broaden as more researchers seek to connect their work to them.
This is not necessarily (only) a consequence of opportunism. It is (also) a predictable response to incentives.
Marianna Mazzucato really believes, that bureaucrats and government agencies can ex ante know how to allocate economic resources efficiently. That's obviously delusional, because this kind knowledge never exists in a centralized shape and form. Rather it has to be discovered through the process of free market competition, as Hayek rightfully pointed out. People change, preferences change, prices change and the future is uncertain for everyone of us.
Love your work, keep it going!
Once again, selection on the dependent variable.
Many years ago, I was engaged by the Government of Canada for a project on improving competitiveness by having the government direct resources to target industries. The project team saw the issues early and the report was delivered with sparse content. We did have one anecdote. The federal government funded a startup near Ottawa -- a topless carwash. If you did not own a car, the firm would rent you one so you could ride it through the process/spectacle of bosoms, soap suds, and multi-directional water spray. The business forfeited on its funding, the government took ownership, and the business failed immediately. Picking winners is hard
That is a priceless story that i just might use in my lectures on entrepreneurial finance.
A question that occurred to me while reading this: does the argument extend to thematic research funding more generally, or is the critique specific to Grand Challenges?
If funding themes systematically influence how researchers frame their work, define their fields, and allocate their attention, one could imagine similar dynamics emerging in many thematic programs, not just Grand Challenges. Where would you draw the line between productive direction and distortion of the research process?
The difference is largely one of degree rather than kind. O/c, ALL funding mechanisms shape incentives. Even disciplinary funding programs influence research agendas. The issue is therefore not whether research should be directed at all, but how much confidence policymakers and funders should have in their ability to identify productive directions ex ante. My concern is strongest when themes become very broad, politically salient/nstitutionally dominant. Grand Challenges are a particularly interesting case because they are often framed at a very high level of abstraction ("sustainability," "resilience," "inclusion"), they carry considerable normative and political weight, and they increasingly influence university strategies, evaluation systems, and funding priorities simultaneously. Then, the risk is that the themes begin to shape how scientific opportunities themselves are perceived and articulated. Researchers start asking not only "What is an important question?" but also "How can I connect this question to the currently recognized challenge?" So, I would say that Grand Challenges represent an extreme case of a more general phenomenon. The further funding priorities move from supporting broad scientific exploration toward organizing research around predefined societal missions, the more relevant the knowledge and incentive problems become.
One mechanism that deserves more attention is how researchers respond to funding and political signals. When a topic becomes strategically important, scholars naturally adapt. The result is often not only more research in the area, but also a gradual expansion of what the area actually means.
I saw a version of this in entrepreneurship research. When entrepreneurship became politically salient and funding followed, there was a noticeable increase in scholars identifying as entrepreneurship researchers. At the same time, the boundaries of the field expanded dramatically. Entrepreneurship came to encompass an ever wider range of phenomena, making the concept less distinctive and arguably less analytically useful.
This was a relatively small field. If such incentive effects appear there, one wonders what happens when entire research systems are organized around Grand Challenges. The concern is not opportunism but normal academic adaptation to incentives. Researchers learn to frame their work in the language that attracts attention and resources. Over time, the challenge itself risks becoming so broadly defined that almost everything can be presented as contributing to it.
This may be an unavoidable consequence of mission-oriented funding and is worth weighing against its potential benefits.
In that sense, Grand Challenges may not only direct research agendas. they may also reshape the categories through which researchers describe and justify their work.
)nteresting observation! I think you're pointing to a mechanism that is distinct from, but complementary to, the knowledge problem discussed in my pos: Indeed, researchers do not merely respond to incentives by shifting topics; they may also adapt the categories through which they define and justify their work. The entrepreneurship example is particularly suggestive because it illustrates how a field can expand as resources, legitimacy, and political attention increase. This has def happened to eship internationally. Ctegory inflation may make the field more attractive institutionally while simultaneously making it less analytically distinctive. Has this happened to eshp? Not sure. In any case, there seems to be a similar process at wrok with Grand Challenges. Concepts such as sustainability, resilience, inclusion, or wellbeing gradually broaden as more researchers seek to connect their work to them.
This is not necessarily (only) a consequence of opportunism. It is (also) a predictable response to incentives.