Monday, August 8, 2016

NSF Grants vs. Improved Data

Lots of people are talking about the Cowen-Tabarrok Journal of Economic Perspectives piece, "A Skeptical View of the National Science Foundation’s Role in Economic Research". See, for example, John Cochrane's insightful "A Look in the Mirror".

A look in the mirror indeed. I was a 25-year ward of the NSF, but for the past several years I've been on the run. I bolted in part because the economics NSF reward-to-effort ratio has fallen dramatically for senior researchers, and in part because, conditional on the ongoing existence of NSF grants, I feel strongly that NSF money and "signaling" are better allocated to young assistant and associate professors, for whom the signaling value from NSF support is much higher.

Cowen-Tabarrok make some very good points. But I can see both sides of many of their issues and sub-issues, so I'm not taking sides. Instead let me make just one observation (and I'm hardly the first).

If NSF funds were to be re-allocated, improved data collection and dissemination looks attractive. I'm not talking about funding cute RCTs-of-the-month. Rather, I'm talking about funding increased and ongoing commitment to improving our fundamental price and quantity data (i.e., the national accounts and related statistics). They desperately need to be brought into the new millennium. Just look, for example, at the wealth of issues raised in recent decades by the Conference on Research in Income and Wealth.

Ironically, it's hard to make a formal case (at least for data dissemination as opposed to creation), as Chris Sims has emphasized with typical brilliance. His "The Futility of Cost-Benefit Analysis for Data Dissemination" explains "why the apparently reasonable idea of applying cost-benefit analysis to government programs founders when applied to data dissemination programs." So who knows how I came to feel that NSF funds might usefully be re-allocated to data collection and dissemination. But so be it.

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