Incentives and Creativity: Evidence from the Howard Hughes Medical Investigator Program

Azoulay, P, J Graff Zivin, and G Manso, “Incentives and Creativity: Evidence from the Howard Hughes Medical Investigator Program” The RAND Journal of Economics, 42(2011): 527-554.

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Despite its presumed role as an engine of economic growth, we know surprisingly little about the drivers of scientific creativity. We exploit key differences across funding streams within the academic life sciences to estimate the impact of incentives on the rate and direction of scientific exploration. Specifically, we study the careers of investigators of the Howard Hughes Medical Institute (HHMI), which tolerates early failure, rewards long-term success, and gives its appointees great freedom to experiment, and grantees from the National Institutes of Health (NIH), who are subject to short review cycles, predefined deliverables, and renewal policies unforgiving of failure. Using a combination of propensity-score weighting and difference-indifferences estimation strategies, we find that HHMI investigators produce high-impact articles at a much higher rate than a control group of similarly accomplished NIH-funded scientists. Moreover, the direction of their research changes in ways that suggest the program induces them to explore novel lines of inquiry.