The source: “Be Careful What You Wish For: A Cautionary Tale About Budget Doubling” by Richard B. Freeman and John Van Reenen, in Issues in Science and Technology, Fall ­2008.

Between 1998 and 2003 the Clinton administration started and the Bush admini­stration finished doubling the budget of the National Insti­tutes of Health (NIH), the primary source of governmental funding for bio­medical research. The result of this historically abrupt largesse, according to one of the affected re­search­ers, has been a “completely new category of nightmare.”

Instead of producing twice as many ­jaw-­dropping breakthroughs as before, the suddenly enlarged research corps plodded ahead at the same steady pace. And the rapid build­up from $14 billion in 1998 to $27 billion in 2003 seemed to suck dry the government’s enthusiasm for ­science—­resulting in a near freeze of the NIH budget. As a result, the NIH is on track to spend 13.4 percent less on biomedical research in 2009 than it did five years earlier. Young researchers who hurriedly ramped up their labs to handle new grants have been pressured to cut staff as they face longer and longer odds of having the grants renewed. “Young people who build their skills as graduate students or postdocs during the acceleration phase of spending bear much of the cost of the deceleration,” write economists Richard B. Freeman of Harvard and John Van Reenen of the London School of Economics. A glut of newly trained graduate students is competing for a shrinking number of ­jobs.

During the doubling, the NIH increased both the value and the number of grants. When the available funds shrank because the annual appropriation failed to keep up with in­flation, the number of grants had to be cut by a fifth. With poorer odds of getting funded, research­ers submitted many more applications, making competition fiercer. The cuts may also have led to “conservative science, as re­searchers shy away from the big research questions in favor of manageable topics that fit with prevailing fashions,” Freeman and Reenen ­say.

The squeeze has struck hardest at scientists just starting their careers. Post­doctoral researchers labor indefinitely in the labs of  senior scientists who continue to win follow-up grants while new grantees are turned down. The average age of new grantees rose from 35.2 in 1970 to 42.9 in 2005, the last year for which numbers are available. Twenty-two percent of grants went to scientists 35 and younger in 1980, but in 2005 only three percent did.

In a choice between equally competent young and older researchers, the economists argue, the government should tilt toward youth. Youthful appli­cants will have more years to use the new knowledge and it will have a higher ­payoff.