One reason I built a website version of this substack was so that I could update existing articles to keep them current. From time to time, I will use this substack to highlight recent updates. This week, I want to highlight a few new papers that I have woven into existing articles on New Things Under the Sun.
Does public sector science respond to profit opportunities? (No)
We’ll start with the post Medicine and the Limits of Market-Driven Innovation, which surveys a bunch of studies to argue private sector biomedical research is pretty responsive to changing market demand, but only when it comes to research that is already close to being commercially viable. More fundamental research does not seem to budge much when market demand changes. Byrski, Gaessler, and Higgins (2021) is a new working paper that provides further evidence in this vein. From the updated New Things Under the Sun writeup:
…Byrski, Gaessler, and Higgins dig back even further, to the research that precedes drug trials. They have data on about half a million scientific publications published between 1997 and 2016, carved up into topics related to 129 different disease categories. Like the other studies mentioned above, they find that when Medicare extension passed in 2003, it led to a significant uptick in drug development for drugs that had become more profitable, as indicated in the figure below (which compares the number of new chemical entity drugs in disease categories as a function of the disease prevalence among medicare enrollees).
From Bryski, Gaessler, and Higgins (2021)
When they dig into the impact on scientific publications, they see a similar effect for the publication output of corporate scientists. That is, scientists working for pharma companies do publish more scientific research related to diseases that Medicare made more profitable to treat.
Change in publication outputFrom Bryski, Gaessler, and Higgins (2021)
But once you leave the corporate sector, things look decidedly less responsive. Looking at scientific publications overall (of which the corporate share is pretty small), the effects are never large enough to be statistically distinguishable from zero.
From Bryski, Gaessler, and Higgins (2021)
So far, this suggests the private sector and its scientists are pretty responsive to the profit motive, but the (much larger) non-corporate academic world is not. But it’s actually a bit worse than that. When Bryski, Gaessler, and Higgins dig into the kind of research corporate scientists publish, they find the increase is concentrated in applied work, not basic science. The increase in corporate science articles comes from articles that are either about new clinical trials or about pharmaceutical products. Even in the corporate sector, more basic science (defined in various ways) doesn’t budge.
Next up, the post Conservatism in Science looked at some of the forces that make it challenging for scientists to buck convention and do really novel work. For example:
Highly novel work tends to attract a greater share of citations from outside the field than from within it (Wang, Veugelers, and Stephan 2017)
Grant committees at the NIH are more likely to recommend grant applications for funding when the reviewers have previously cited the applicant’s work (Li 2017)
Since people in the field are the ones most likely to review grant applications, these two factors together suggest doing novel work makes it harder to get grants for future research. A new paper by Ayoubi, Pezzoni, and Visentin provides some direct complementary evidence of this implication.
…[Ayoubi, Pezzoni, and Visentin (2021)] looks at 775 scientists who applied for a grant from the Swedish SINERGIA program over 2008-2012. For each scientist, they assess their prior work for novelty of the sort examined by Wang, Veugelers, and Stephan (2017) - did the scientist publish any papers that cited highly unusual combinations of journals in the preceding three years? They then show scientists with a novel publication are less likely to win a research grant than more conventional scientists who have an otherwise similar professional track record.
Finally, the post Entrepreneurship is contagious looks at evidence that entrepreneurship seems to spread sort of like any other transmissible bug - when people are around entrepreneurs, they are more likely to become entrepreneurs themselves. Wallskog (2021) is a PhD job market paper that provides a host of new evidence relevant to this. Here is an excerpt from the updated version of Entrepreneurship is contagious:
…We can broaden this line of inquiry to workplaces in general with Nanda and Sørensen (2010) and Wallskog (2021). Nanda and Sørensen track approximately 270,000 workers in Denmark over the period 1990-1997, each of whom has no prior history of entrepreneurship before 1990, and were newly hired by an established employer in 1990. For each of these individuals, they count how many of the individual’s co-workers were entrepreneurs during the previous five years (and for how long). They then see how the presence of formerly entrepreneurial coworkers affects the subsequent decision of an individual to start a business. Wallskog uses US census data to performs a very similar exercise for millions of US workers. Do those who worked with more entrepreneurial coworkers go on to form their own companies at a higher rate?
Both papers find people whose coworkers have a history of entrepreneurship are more likely to go on to be entrepreneurs themselves. One weakness of this data is that both papers only know if people worked at the same establishment; they don’t know if the coworkers ever had any actual interaction. But Wallskog shows the effect of entrepreneurial coworkers is much stronger when the coworkers work at the same location (instead of a different location in the same firm), at the same time, and when they have similar salaries (and so might be more likely to interact). And it’s a reasonable guess that people were more likely to interact with their coworkers when they both worked at small establishments. As Nanda and Sorenson show in the figure below, the impact of entrepreneurial peers is greatest in the settings where the probability of an interaction is highest. And Wallskog finds a similar effect, with the share of entrepreneurial coworkers exerting twice as strong an effect when the establishment has under 25 employees as it does when the establishment has more than 100.
But Wallskog’s paper has a lot more of interest in it. So much so, that I discussed some other aspects of it in another post titled The “idea” of being an entrepreneur. That post argues that, for most people, becoming an entrepreneur is literally unthinkable in the sense that they literally don’t think of it, and that what’s “contagious” about entrepreneurship is the very notion that being an entrepreneur is an option worth considering. Here’s an excerpt from the updated version of The “idea” of being an entrepreneur that talks about a different aspect of Wallskog (2021):
In 2014, 2015, and 2016, the US census bureau surveyed all non-farm business owners whose businesses reported more than $1,000 in receipts to the IRS. Among other things, it asked about their reasons for owning a business. One in four said the presence of a family or friend entrepreneurial role model was a “very important” reason. And more than one in two said it was at least somewhat important!
We can go even farther. As discussed earlier, Wallskog (2021) shows that people who have a greater number of entrepreneurial coworkers are more likely to start businesses in later years. And if they do, that means they are going to be surveyed by census about their reasons for forming a business. She matches about 7,000 of these respondents to her other census data and shows these new entrepreneurs are more likely to report role models are an important reason for being an entrepreneur. That is, people who work with more entrepreneurs are more likely to become entrepreneurs, and also to tell census that one reason they became an entrepreneur is because they had a role model for doing so.
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