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Funding Risky Research

Chiara Franzoni, Paula Stephan and Reinhilde Veugelers

Entrepreneurship and Innovation Policy and the Economy, 2022, vol. 1, issue 1, 103 - 133

Abstract: The speed with which COVID-19 vaccines were developed and their high performance underlines how much society depends on the pace of scientific research and how effective science can be. This is especially the case for vaccines based on the new designer messenger RNA (mRNA) technology. We draw on this exceptional moment for science to reflect on whether the government funding system is sufficiently supportive of research needed for key breakthroughs, and whether the system of funding encourages sufficient risk-taking to induce scientists to explore transformative research paths. We begin with a discussion of the challenges faced by scientists who did pioneering research related to mRNA-based drugs in getting support for research. We describe measures developed to distinguish risky from nonrisky research and their citation footprint. We review empirical work suggesting that funding is biased against risky research and provide a framework for thinking about why principal investigators, panelists, and funding agencies may eschew risky research. We close with a discussion of interventions that government agencies and universities could follow if they wish to avoid a bias against risk.

Date: 2022
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