Week 13: New Research Organizations

Incentives impact how we spend our time. In the work world, incentives are often what determines which projects we work on. The simplest incentive to understand is a financial one. I will spend my time working on a project because someone else is paying me to do so. In exchange for money, I am giving someone else my time and energy. I am willing to make that exchange because I believe the money will improve other aspects of my life or allow me to accomplish other things I care about. These incentives facilitate the coordination of many people’s energy into common directions. By paying many employees, a company directs lots of energy towards one goal.

While financial incentives are probably the easiest to understand, there are also incentives that are not tied to money. Financial incentives are most powerful when people need money to meet their basic needs. As an individual’s wealth increases though, financial incentives become less effective. When considering different high paying jobs, people often take into account other factors besides money. They will care about the mission of the organization or the role they are being offered. I have friends who are attracted to working at big tech companies, because of the prestige that comes with doing so. They are less interested in the money, but rather the status of working at a certain organization. To understand why people allocate their energy towards certain projects it is important to recognize the impact of these other non-financial incentives.

Through studying incentives we can better understand why individuals allocate their energy in certain ways.

Recently, there has been growing criticism that basic scientific research is not producing output in the way that it could be. If we accept this claim, then there must be something wrong with the incentive structure in scientific research. The incentive structure is what causes people to spend their energy in suboptimal ways. Different organizations have started trying to tackle this problem by changing incentives in different ways. See Nadia Eghbal’s piece here for an extensive coverage of this.

From my own experience with both academic research and startups, I am thrilled that people are trying to create new organizations. My belief that these organizations have problems is from my experience with their incentive structures and the impact it has on me and my peers. Having new organizations with different incentive structures should create new projects that otherwise would not exist. Each of these new organizations has a slightly different approach which stems from their differing thoughts on how current structures are not adequate. I am going to as succinctly as possible state my beliefs about why current organizations have perverse incentives. (I am only going to comment on academic research and startups / corporations. These are the two types of organizations I have the most exposure to. I am sure there are difficulties with governmental organizations or non-profits but I have less experience dealing with those so will not speak to them)

Across organizations, the core problems stem from how success is measured.

Academia

In academic research, success is measured by paper publication in top journals or conferences. Using these third party organizations (journals / conferences) to measure research quality could be due to the decentralized nature of academic research. Research occurs at hundreds of universities all across the world. Journals provide one location for research produced at all these different institutions to be evaluated and compared.

Acceptance into a journal is determined through a peer review process. Submissions are generally reviewed by three reviewers who have expertise in the field. Each reviewer gives a numerical grade evaluating the submission.

While I can understand why this system has developed, I believe it creates the following harmful incentives:

1. Since reviewing papers is not an activity that impacts a researcher’s career there is minimal incentive to spend lots of time reviewing papers. Generally, researchers are not paid to do reviews. Reviews are additional tasks on top of everything else and sit at the bottom of their priority list. Additionally, there is no tracking or evaluation of if someone is good at reviewing. If reviewers are not putting that much energy into the process, they will probably tend towards promoting work that comes from people who are already successful or institutions that are known to be successful.

2. The easiest path to create research that will get accepted into a top journal is to pick a narrowly defined topic in an already defined direction. Working on narrowly scoped projects makes it easier to publish more frequently. Reviewers are more likely to quickly grasp projects that build upon work they are already familiar with. This disincentives work on projects that are more exploratory or might take a longer time frame. Researchers feel like they do not have these options when they are expected to be publishing in top journals every year.

3. I personally believe that there is still a lot of work that needs to happen after a research paper before the work becomes truly impactful. Research often has to be translated into a form that non academics can understand. There is also work related to understanding the implications and use cases of research. Treating research papers as a final product leaves a lot of work for others to do, before the research can reach its potential impact.

I believe that these incentives lead academic researchers to have much less of an impact than they could. To increase the impact of academic researchers, we need to change how success is measured in the field. Being successful should incorporate being a good reviewer, taking riskier research approaches and continuing to push work forward even after it has been published.

Industry

For companies the marker of success is their monetary valuation. This is true for both public companies and private companies / start ups. In public markets valuation is determined by the stock market. For private companies valuation is determined by VC funds and other funding institutions.

While a company’s valuation is connected to it’s revenue and it’s revenue is connected to the value it creates, this system creates the following harmful incentives:

1. Companies are pushed to focus their energy on doing things that will increase their valuation. This often means focusing on growing as large as possible.

2. People are attracted to work at companies that have higher valuations. Since people are attracted to companies that are already successful a lot of talent goes to work at entrenched companies.

3. If a measure of success in our world is one of monetary value then it becomes easy to measure our success by monetary value in other situations. I believe this focus on monetary value leads individuals to benchmark their own success based on salary.

4. It is possible for a company to be seen as successful even if it is not creating beneficial value to society. If a company has figured out a way to make profit, then it will be considered a success.

I believe that these incentives led corporations to have a much less beneficial impact on society then they could. Rather than trying to improve society and understand how they are improving society, corporations are focused on growing their profit.

Our measures of success have such a large influence because we use these measures to help make decisions. When faced with two decisions, we make the one that will increase our success. In the United States, we constantly are messaged that being successful is desirable. We are taught growing up that we should pursue achievement; we want good grades and to attend a good college. It is so ingrained in our society that success is desirable.

Using success to measure ourselves creates good outcomes when our measures correlate with both societal and individual well being. But if our measurement is not aligned then people may try to hit the success benchmarks at the expense of well being.

While I am excited about these new organizations that are being created, I worry that they are not attacking the fundamental problem of changing how we measure success. In general, these new organizations are targeting people who are already in the field of scientific research and attempting to give them more funding. It is possible that by divorcing their funding from traditional outlets they are changing what success means. If that is the case then some of these organizations might create a large shift. But if they are perpetuating our current measures of success then I worry they will not fix some of the current problems.

To create better outcomes we need new definitions of success. It is important that these definitions are mainstream and speak to a broad audience. Organizations are powerful because it is difficult to work on your own. By creating mainstream organizations which define success differently we can hopefully redirect energy towards increasing societal well being. Rather than college graduates going to work in management consulting or banking they might work on projects that have a larger positive impact on society.

My criticisms of existing organizations have mostly centered on identifying problems with what organization’s are producing. But a lot of my thinking about organizational failure actually stems from the unhappiness I see in my peers. So many of the people I talk to are frustrated or unfulfilled by their work life. Since work eats up so much of our time these difficulties quite drastically impact people’s overall well being. I think one of the most powerful ways we can improve individual well being is improving work situations. I know personally that changing my work situations has had a large impact on my happiness.

I believe that people can contribute the most to society when they are happy and content. When people are angry or upset that impacts how they interact with others. It is difficult to contribute your time and energy when you have low levels of well being. If our work organizations are not providing people with fulfillment and meaning, then they are failures regardless of the output they are creating.

The necessity for new organizations is not only because of suboptimal output. We also need new organizations because currently many are unfilled by their work life. In actuality, these two observations are not independent. One way to improve someone’s work life is to change what output they are incentivized to create..