Suppose a funding agency happens to have some extra money and needs to decide how to invest it. Should it invest that extra money in a large, highly productive laboratory, so that laboratory can expand a bit more? Or should it invest that extra money in a small to moderate size laboratory? Given our inability to predict the future with great certainty, which approach represents the smarter investment strategy?
Jon Lorsch, the director of the National Institute for General Medical Sciences (NIGMS), has posted an interesting video on just this question. Lorsch invokes the well-known economic principle of “diminishing marginal returns,” that is, each additional input on the margin yields less and less additional output. Thus, for a small to medium sized laboratory, an additional 20% of funding may yield 15% additional output; on the other hand, for a large laboratory an additional 20% of funding may yield only 10% additional output. Lorsch cites published reports suggesting that this happens in biomedical research – marginal returns decline with increasing investments.1, 2, 3, 4
Lorsch notes that there is another potential advantage of using marginal funds to support small-medium laboratories rather than providing additional support to large laboratories. Funding agencies have limited resources. Giving extra money to small-medium laboratories means that agencies can fund more laboratories, offering the potential for a more diverse portfolio. Science is inherently unpredictable – we simply don’t know where the next breakthrough will come.5 So in the interest of maximizing the likelihood of breakthroughs, we might follow the maxim of many smart investors – spread the risk across a wide spectrum of projects.
We encourage you to watch and send us your thoughts about Dr. Lorsch’s thoughtful video, as we continue our dialogue about accountability and stewardship.