1. SUPPORTING “THE BEST AND BRIGHTEST” IN SCIENCE AND ENGINEERING: NSF GRADUATE RESEARCH FELLOWSHIPS* Richard Freeman, Tanwin Chang, Hanley Chiang NBER and Harvard Presented at the SEWP Research Conference Oct 19-20, 2005 Cambridge, Massachusetts * Supported by a grant from the NSF in collaboration with the Council of Graduate Schools (CGS). While serving as an AAAS/NSF Science and Technology Fellow, Dan Stanzione was instrumental in facilitating this study from the NSF side. Jason Abaluck of Harvard assisted in preparation of the data. We thank Myles Boylan of the NSF for leading a thoughtful review of a short version of part of this work given at the AEA meetings.

2. Stipends: Funding Modes for Graduate Education Regular payments (distributed to approx. 2/3 of S&E grad students) Three main types of stipends: –Fellowships: competitive awards (13% of FT grad students) –Teaching Assistantships: teaching required –Research Assistantships: research required Multiple Funders: –Government: NSF, NIH, etc. –Universities, Foundations, Individuals Postdocs may also receive stipends, often via fellowships Other forms of funding: –Self-financed: savings/family –Loans –Traineeships

3. Stipends: Potential Supply-Side Policy Tool Time in graduate school/postdoc represents up to ¼ of a scientist’s career. (6 years grad school + 4 years postdoc = 10 years out of 40 year career) –Salary over first ¼ will have a non-trivial effect on lifetime earnings – larger than later $ because of discounting –Signalling effect to student can also be important Government fellowships may be restricted to citizens/permanent residents, primarily affecting US individuals (Gov’t awards ~1/3 of S&E Fellowships) Quantity and price dimensions – policy can alter number of awards and value of awards

4. NSF Graduate Research Fellowship Program (1952 - 2004) The number and value of GRF awards vary over time.

5. Primary Data Source: NSF’s Cumulative Index (CI), including Follow-Up Data

6. The number of awards per S&E baccalaureate has shifted downwards GRF Awardees as Proportion of S&E Bachelors (1952 - 2004)

7. Huge Changes in Distribution of GFRP Awardees by Field: Decline of Physical Sciences

8. Because of Changes in Applicants by Field

9. Our research implies that a shift to pure “measured scholastic” achievement would not necessarily benefit the hard sciences at the expense of the more qualitative sciences. Using linear probability model, found only modest shifts among most disciplines. The biggest increases in awardees were for Psych and Social Science at the expense of Engineering! Why? Mean Applicant Quality QuantVerbalGPARefs Engineering 7285733.670.05 Psychology 6536153.570.27 Soc Science 6676423.600.19 What if NSF Did Not Regulate the Percentage of Awardees in Each Discipline?

10. Analyzing the effect of changes to stipends on S&E workforce: Quantity (N) and Quality (Q) When the number or value of awards changes –What happens to the number and quality of applicants, awardees, and graduates? N = S N (#awards, $awards, X) Q = S Q (#awards, $awards, X)

11. GRFP Applications and Relative Value of GRFP Stipend, 1968-2004 Source: NSF, Division of Graduate Education, Cumulative Index of the GRF Program and related datasets. Bachelor’s degree data tabulated by National Science Foundation/Division of Science Resources Studies; data from Department of Education.

12. GRFP Applications and College Graduate Unemployment Rate, 1979-2004 Source: NSF DGE, Cumulative Index of the GRF Program and related datasets. Bachelor’s degree data tabulated by National Science Foundation/Division of Science Resources Studies; data from Department of Education. Unemployment data from estimated from the annual Current Population Survey (CPS) Outgoing Rotation Group, Bureau of Labor Statistics.

13. GRE Quantitative Scores of Awardees and Relative Stipend Value, 1968-2004 Source: NSF DGE, Cumulative Index of the GRF Program and related datasets. Salary data estimated from the Integrated Public Use Microdata Series (IPUMS) of the March Current Population Survey.

14. GRE Verbal Scores of Awardees and Relative Stipend Value, 1968-2004 Source: NSF DGE, Cumulative Index of the GRF Program and related datasets. Salary data estimated from the Integrated Public Use Microdata Series (IPUMS) of the March Current Population Survey.

15. Linear Probability Model for the Impact of Scholastic and Demographic Variables on GRF Awards. Source: NSF, Division of Graduate Education, Cumulative Index of the GRF Program and related datasets.

16. Determinants of the Number of GRFP Applicants, 1969-2004 Source: NSF, Division of Graduate Education, Cumulative Index of the GRF Program and related datasets, as described in text. Outside salary are earnings of college graduates aged 21-25. Outside salaries and unemployment rates from Current Population Survey

17. Determinants of Awardee Achievement, 1969 - 2004 Source: Tabulated from NSF, Division of Graduate Education, Cumulative Index of the GRF Program and related datasets, as described in text. Outside salary are earnings of college graduates aged 21-25, tabulated from Current Population Survey.

18. Quality of GRFP Applicants on the Margin of Getting and Award, 2004 GRE Quant GRE Verbal 550 600 650 700 750 800 123456789 10 Source and Notes: All persons to the left of the line were given awards. All persons to the right of the line did not get awards. The numbers relate to groups of 50 persons, ordered by the estimated probability they would win an NSF award. The 5 th group consists of 50 awardees with the lowest probability of getting an award, the 4 th group consists of 50 awardees with the next lowest probablity, and so on. The 6 th group consists of the 50 non- awardees with the highest probablity of getting an award. The probabilities are predicted values from an OLS regression of an award receipt dummy variable on panel rating, female dummy, underrepresented minority dummy, and eight field dummies.

19. Units for Stipend Budget: Dollars per $10 Million GDP Dollars Bottom Line Message: Students respond to spending on Government Fellowships Fellowships Fraction of Bachelors choosing to apply to GRF vs. total GRF stipend budget/GDP. Source: NSF DGE, Cumulative Index of the GRF Program and related datasets. Data on the Gross Domestic Product (GDP) from the Bureau of Economic Analysis, an agency of the U.S. Department of Commerce.

20. Conclusions Verified that primary determinant of awardees are academic achievement. Verified that women and minorities have higher chance of winning fellowship, compared to white men of similar attributes. for every 10% increase in the stipend value, the number of applicants goes up by 8-10%. the supply of applicants contains enough qualified candidates to allow for a sizable increase in the number of awards without greatly reducing measured skills. Further work to see if results of this study generalize to the population of stipend grantees requires detailed consideration of the entire market for all stipends … NSF are important but there are many other awarding agencies and groups.

21. Notes: “Hypothetical” characteristics denote those predicted to prevail if awards as % of S&E bachelor’s degrees had been maintained at 0.41% (its 1968 value) and stipend as % of alternative wage had been maintained at 115.8% (its 2004 value). Hypothetical changes in GRE Quant and GRE Verbal are based on coefficients in columns 1 and 3 of Table 7. In the calculations, actual numbers of bachelor’s degrees in 2002-2004 were imputed from 2000-2001 field-specific growth rates in earned bachelor’s degrees, and actual alternative wage in 2004 was imputed from 1983-2003 growth rate in salary of 21-25 yr olds with bachelor’s degrees. Fixed Rule Policy Scenario: # of awards 0.41% of S&E Bachelors Degrees $ of awards 115.8% of alternative wage