Trading shares in completed work would bring multiple benefits, say Clifford Ellgen and Dominique Kang
There’s a growing concern worldwide that the traditional method of allocating research funding through competitive review of grant proposals is too risk-averse. Faced with several times more applications than they are able to support, funders tilt towards safe bets—short-term, incremental studies with clear applications. The evidence suggests that this low-risk approach chills the risky, unorthodox work that tends to be the most transformative.
Groundbreaking research is, of course, much easier to recognise in retrospect than in advance. So what if, instead of judging grant proposals, funders could support researchers based on the quality and value of their completed work?
In a recent paper, we suggest a mechanism to allow just this: channelling funds to completed research based on its demonstrated value. We believe this would help the best work rise to the top more quickly, reward genuine impact and excellence over volume and predictability, and allow researchers to spend more time on research and less on writing grant proposals and self-promotion.
We call this method of funding ‘research equity’. The research equity system consists of two elements—one to allocate resources and one to reveal research value.
We use the word ‘equity’ in its financial sense. In the research equity system, researchers would submit a completed paper to an online repository, which would generate a number of shares in that paper. Those shares would then be divided, in some prearranged ratio, between the researchers that did the work and the research institutions that supported it.
Share price would begin at zero. As the value of the research becomes evident, buyers—most likely traditional funders such as government agencies and philanthropies—would offer to purchase shares, raising or lowering their offered share prices depending on changing perceptions and evidence.
Buyers would purchase shares to stimulate scientific progress, not to obtain intellectual property rights. In some ways, the research equity system is similar to a prize fund—except the goal and value of the prize is not defined in advance.
Researchers and research institutions can sell their shares at any point—for instance, when they believe the shares to be adequately valued or when they require cash for a project, staff member or piece of equipment.
A secondary market for trading shares could develop, with intermediate investors buying shares in the hope of seeing their value rise. The trading of shares could provide liquidity in financing research, as well as drawing attention to valuable results.
To avoid monetising deceptive or fraudulent research, only qualified buyers should be permitted to purchase shares. This would make the research equity system more similar to the private equity market—which is limited to specialist funds and investors—than a public stock exchange.
Even for experts, though, valuing scientific work is not easy. Researchers disagree, and it can take years for applications and significance to become apparent.
To help guide buyers, then, the research equity system would not only support the trading of shares in papers, but also help rate those papers.
We propose generating ratings with a novel comparative peer-review system. A reviewer would be presented with two research papers and asked to decide which is of greater scientific and socioeconomic value. The winning paper’s score would go up, the other’s down. (Chess uses a similar system to turn players’ wins and losses into ratings.) Repeated comparisons would provide a robust measure of the scientific community’s current assessment of a paper’s value, which could change over time.
This system would admittedly create work for reviewers. But, compared with reviews for journals, it would generate more data, helping to highlight up-and-coming research and influencing the valuation of completed research. Reviewers would also be able to influence funding trends in their field.
The research equity system is designed to sit alongside grant funding, not replace it. But it has the potential to create positive effects throughout basic research.
Research institutions would become incubators, incentivised to accumulate a diverse research portfolio consisting of bold new ideas and creative approaches alongside more mainstream work.
Institutions could increase their portfolio’s value by, for example, supporting follow-on research, or explaining the relevance of complex or underappreciated findings. This might accelerate recognition of important research results, which can sometimes take years or even decades.
By the same token, the onus to disseminate and promote research would be spread
more evenly between researchers and research institutions.
Research equity funding could reduce the amount of time researchers currently spend writing grant proposals. Institutions would want their researchers to spend their time doing research, not financing it. And researchers would be better able to back their hunches, going out on a limb or switching fields without first having to win a grant.
The research equity system would also relieve the impetus for constant publication, as a few high-impact papers may well be worth more than many low-impact publications.
Launching a research equity system would require sponsors—probably philanthropies—willing to spearhead it. If the system seems an effective way of financing valuable research, then more researchers and funders would begin participating. Eventually, government funding agencies could begin using some of their budget to buy research equity shares.
Scientific discovery is inherently unpredictable, so we must plan for the unexpected. Given the tremendous significance of basic research to society and technology, research funding must open the door to the creativity and innovation of the research community.
By creating a market for basic research, the research equity system would reliably reward valuable results, enabling the scientific community to produce discoveries beyond our current understanding.
A day in the life
Here’s how a research equity funding system might affect the typical working day of a researcher, a buyer and a research director.
1. The researcher
Sharon opens her email, which contains a request from the research equity site to compare two papers. Last week, she read both papers and made a few comments that may be helpful to other reviewers. She gives the papers and her comments a final once-over and then selects the paper that she believes is more valuable. Each paper’s rating updates automatically to reflect her choice.
Sharon then checks how her own work is performing on the research equity site. The ratings of some papers seem to be holding steady. But she expects one of these to get a boost soon, as new results supporting its hypothesis are due to appear. A philanthropy has offered to buy shares of one of her older papers at a reasonable price, so she sells
10 per cent of her shares.
After giving her latest manuscript a final read-through, Sharon submits the paper to the research equity site, specifying an allocation of shares to her co-authors and research institution as per their existing agreement. After her submission, the system emails the co-authors and research institution to verify that the information and share allocation are correct. Later that day, the paper goes live and begins to receive reviews, which influence its rating.
2. The buyer
Miguel is an analyst at a philanthropy that funds basic research. He finishes lunch and logs in to the research equity site. The philanthropy has made offers to buy shares in several papers, and Miguel notes that earlier today several researchers and research institutions took those offers up.
Miguel checks his outstanding purchase offers. He notices two research papers, the authors and institutions of which have sold no shares at the offered price for five months. In the meantime, both papers’ ratings have risen considerably. He makes a note to have his team reassess the research to inform a new offer price.
Finally, Miguel scans the literature in topics relevant to his philanthropy’s cause. He sees a few papers with ratings that have recently risen into the range that his philanthropy finds interesting. He adds these to his reading list; if they fit the philanthropy’s criteria, he will recommend making an offer to buy shares in them.
3. The research director
Jasmine is the director of a university research department. Researchers have proposed some promising new ideas, and she considers how they might be funded. She checks the offer prices for papers in which her department owns shares. The share prices of some of the more mature papers have probably plateaued. She chooses a few of those papers and sells up. The resulting cash injection will cover the cost of several newly proposed projects.
Jasmine then looks at some of the other research her department owns. She believes that some of those papers are worth more than the research community currently appreciates. She schedules a meeting with Sharon to discuss studies that might produce valuable new results, as well as more fully demonstrating the value of research papers that they already own
Clifford Ellgen and Dominique Kang are at Ordinal Research Institute in Wilmington, Delaware, United States
This article also appeared in Research Fortnight