Don’t Put All Your Labs in One Basket
Audio Brief
Show transcript
This episode analyzes the United States federal science funding apparatus not as a budget item, but as an investment portfolio that desperately needs diversification to maximize returns.
There are three key takeaways from Caleb Watney’s presentation on optimizing scientific progress. First, the current American funding portfolio is dangerously over-indexed on conservative investments. Second, modern science requires a shift toward institutional support rather than individual project grants. Third, the labor model of science must evolve to support professional, specialized roles instead of relying on transient graduate students.
Regarding the portfolio imbalance, Watney argues that the US system operates like a financial portfolio invested 80 percent in low-yield bonds. The dominant mechanism for funding is the small, risk-averse project grant, similar to the NIH R01. While these grants provide stability, their short four to five-year cycles and pre-defined outcomes stifle high-risk exploration. Just as an investor diversifies across asset classes to balance risk and reward, a nation should diversify its scientific investments across different mechanisms and time horizons.
The second takeaway focuses on the need for institutional funding models, dubbed X Labs. The current system treats scientists like individual contractors, which fails to match the collaborative reality of modern discovery. Instead of funding specific experiments, the X Lab model proposes funding organizations with specific missions via block grants. This shift allows for long-term planning horizons of seven years or more, enabling teams to pivot as they discover new information rather than being locked into rigid grant deliverables.
Finally, the labor structure of science needs professionalization. The popular image of the lone genius has been replaced by interdisciplinary, infrastructure-heavy teams. However, the current grant system creates a rotating cast of characters, relying almost entirely on temporary graduate students. Watney advocates for funding structures that support permanent, specialized staff—such as professional engineers and data managers—allowing lead scientists to focus on discovery rather than administrative tasks and constant grant writing.
The bottom line is that policymakers must move beyond the monoculture of project grants and actively allocate resources to alternative models like prizes and focused research organizations to capture high-risk, high-reward upside.
Episode Overview
- This presentation by Caleb Watney analyzes the United States' federal science funding apparatus not as a single budget item, but as an investment portfolio that needs diversification to maximize returns.
- Using extensive data visualization, Watney demonstrates how the current system is heavily over-indexed on one specific mechanism—small, risk-averse project grants for university life sciences—effectively operating like a financial portfolio investing 80% in low-yield bonds.
- The episode proposes a shift toward "institutional" funding models (X-Labs) and alternative mechanisms (prizes, focused research organizations) to better support modern, team-based, infrastructure-heavy science.
Key Concepts
- Science as a Portfolio: Scientific funding should be viewed through the lens of portfolio optimization. Just as a financial investor diversifies across asset classes (stocks, bonds, emerging markets) to balance risk and reward, a nation should diversify its scientific investments across different mechanisms, time horizons, and risk profiles. Currently, the US is dangerously "overleveraged" in conservative, incremental research.
- The "Bond" of Science Funding: The dominant mechanism for federal funding is the "project grant" (like the NIH R01), which Watney equates to a financial bond. These grants are capped at relatively low amounts (~$500k), locked into 4-5 year cycles, and require pre-defined outcomes. While necessary for stability, their dominance stifles high-risk exploration and makes pivoting to new discoveries difficult.
- The Evolution of Scientific Labor: The popular mental model of science is the "lone genius" (e.g., Einstein at a chalkboard). However, modern science has become increasingly team-based, interdisciplinary, and infrastructure-intensive (e.g., the thousands of scientists required to find the Higgs Boson). The current funding model, which treats scientists as individual contractors, has failed to adapt to this collaborative reality.
- The "X-Lab" Model: Watney introduces the concept of "X-Labs"—scientific institutions funded via block grants rather than project grants. This model shifts the focus from funding a specific experiment to funding an organization with a specific mission. This allows for long-term planning (7+ year horizons) and the hiring of specialized professional staff (engineers, managers) rather than relying solely on graduate students.
- The Five Lenses of Funding: To understand the ecosystem, one must analyze five distinct variables:
- Funder: (Federal vs. Private)
- Performer: (University vs. Business vs. National Lab)
- Purpose: (Defense vs. Health vs. General Science)
- Field: (Life Sciences vs. Physical Sciences)
- Mechanism: (Project Grant vs. Person-based Fellowship vs. Block Grant)
Quotes
- At 3:16 - "My number one biggest concern about science today is we're like a financial portfolio that's 80% invested in bonds. You want to have some bonds in your portfolio... but if it's 80%, that's way too high... I kind of want some more emerging tech stocks. I want some more emerging markets exposure." - Explaining the core thesis that the lack of structural diversity in funding mechanisms is a greater threat than the total dollar amount of funding.
- At 15:46 - "Driving force should be for 'more different science.' ... We don't have to decide the exact share that should be prizes [vs grants], but we know it should be more than what it is currently, which is almost nothing. So there's just a lot of room to push in almost any single direction." - Highlighting that because the current portfolio is so homogenized, almost any experimentation with new funding models is likely to be an improvement.
- At 17:09 - "Where are the corporations of science? Today we almost treat scientists as if they were each independent contractors who were doing their own specific project rather than working together as part of a cohesive whole." - Illustrating the mismatch between the collaborative nature of modern discovery and the individualistic nature of the grant system.
Takeaways
- Diversify Funding Mechanisms: Policymakers and philanthropists should stop relying exclusively on the "project grant" monoculture. Actively allocate resources to alternative models like prizes, person-based fellowships (betting on the scientist, not the project), and focused research organizations (FROs) to capture "high-risk, high-reward" upside.
- Professionalize Scientific Operations: Move away from the "rotating cast of characters" labor model where research relies almost entirely on transient graduate students. Build funding structures that support permanent, specialized roles—such as professional engineers, data managers, and technicians—allowing star scientists to focus on discovery rather than HR and grant writing.
- Fund Institutions to Solve Politics: Use institutional block grants ("X-Labs") to bypass political gridlock regarding indirect costs. By ring-fencing funding for independent institutes outside the traditional university system, funders can grant autonomy and avoid debates about cross-subsidizing unrelated university administrative costs.
