Boston U. Questrom School of Business, United States
This paper estimates the elasticity of demand by academic scientists for material inputs into the scientific production function. Using rich administrative data from the accounting records of thousands of labs at U.S. research universities, we examine the impact of price changes in an event study and difference-in-differences framework. We draw on novel data from changes in university procurement contracts -- when they are renegotiated or have force majeure price adjustments -- to estimate how labs respond when there are exogenous price changes in helium, a speciality gas critical in many scientific fields. We find that scientists decrease their use of gases in response to helium price increases. Meanwhile, there is a slight increase in use in non-gas inputs and a slight decrease in labor inputs. We show that there is a decrease in the overall production of papers, and particularly fewer papers using helium. Our results suggest a slowdown in the rate, also likely a change in the direction of science. These results show that price shocks for specialized inputs matter for scientific production, and there may be a need for insurance mechanisms or increased budget flexibility among universities and funders of scientific research.
