Efficiency matters: Research funds divided by three

Research improves our lives: There’s even a Nobel prize demonstrating that it is good for governments to sponsor research, so long as it has no immediate commercial pay off.

I just looked at a grant for a Post-doctoral fellow – the people responsible for most of the hard laboratory work, paper writing, and many if not all the bright ideas in science. Salary: £28,000… OK but hardly a wonderful reward as a first job for over 8 years of education. Not much security either – this is a one year contract.

But how much does the university want to host this person for one year? Perhaps nothing – anticipating the research credit. Think again: the “full economic cost” – the Bill to the tax payer for paying the Post-doc their 28k salary over the year… £104,500.
Yes: 300% overheads. Some of it is fair: about 5k in software licenses, heating, superannuation. The other £71,000… Well, all we know is it is not going to this post-doc to do their research.

Viewed positively, this means that the country could triple its research output at no cost.Realistically…. well, you tell me.

Doctors salaries feed through to… unemployed doctors

The AMA negotiation of their own salaries is a good example of how vulnerable non-market negotiations are to capture by those with concentrated benefits from those with distributed costs.. in this case raising average GP salaries to over £100,000/yr.

What happens…? Adam Smith would be happy to look into the future:

Action 1: Many Drs. retire (final salary pension now sees them on a much increased pension of around £50k for the rest of their lives – plus still being able to do all the hours they might choose to do locum-ing now.
Consequence 1: Shortage of Drs

Action 2: Despite needing more Drs, the hospitals can’t afford to pay even the remaining existing salaries
Consequence 2: 7000 of the 15000 new graduates for this year are unemployable.

The AMA answer to this is to request… yet more money for the system: How about instead we let all those newly minted fit and smart young Drs trained at our expense simply bid for the jobs of the existing Drs: establish a new price. I’m guessing they’ll do the work for half the price and be very happy to get the work.

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