The psychology of Horizon 2020 budget cuts

Resisting a reduced spend on science in Europe may require decision makers to understand the mechanisms that makes them discount future benefits in return for short-term certainty on cost savings.

Is it better to invest money now or save it for a rainy day? A dilemma faced by millions of people in the tough economic climate: invest now for an uncertain return in the long-term future, versus saving it for short-term needs. It is also a problem for Europe’s political leaders, who in an era of austerity may have the science budget in their sights for disproportional spending cuts.

The next EU Framework Programme for Research and Innovation, known as Horizon 2020, was to spend around 90 billion euros from 2014-2020. This represents an increase of about 8% on the previous spend. Its objective: to allow Europe to continue to build a knowledge-based economy. Unfortunately, the European Commission recently advocated a reduced spend of around 80 billion euros, or less, as they make cuts across the board. Researchers across the continent have rallied against the proposed cuts with online petitions and have published open letters, including from notable Nobel Prize winners.

Both sides have a point: short term spending cuts will reduce deficits and free up money to spend elsewhere. On the other hand, science has a proven track record in providing a long-term return on the investment. So what do you do?

Decision making of this sort is a blend of economics and psychology. Future benefits that require present sacrifices are intertemporal choices that take place over time says psychologist Marianne Promberger from King’s College London, UK. This leads to factors such as the theory of ‘discounting’ to come into play. If you have 10 billion euros now versus 10 billion in one years’ time, the 10 billion is worth more to you now. “That is perfectly rational in principle because with 10 billion you can invest [short term], so you discount the future,” she says. This is a perfectly reasonable way of dealing with uncertainty about the future.

Unfortunately, people are inconsistent with how they discount the future. And in terms of policy-making, Promberger says the information readily available is what we pay attention to. This is known as the ‘availability heuristic’ in that politicians may make sincere pledges before election; to maintain the science budget or invest in green technologies for instance. But when confronted with more information after being voted in, then come to different conclusions.

And when budget cuts are needed, the axe often falls on groups or projects that are less visible to the general public, or do not have a well-organised electorate group standing behind it, says economist Jan-Egbert Sturm of the KOF Swiss Economic Institute at ETH Zurich, Switzerland. And ‘blue skies’ scientific research is a much more hopeful, and hence vulnerable, investment than more tangible projects such as Eurofighter jets or high-speed rail links. “In general, the benefits of any type of investment usually are only visible in the future, whereas the cost saving is achieved immediately,” he says. “Given the short-sighted nature of many voters, that hence turns the government into myopic [short-term] behaviour.”

What can policy-makers can do to avoid these contradictions? Richard Wahlund, head of the Center for Media and Economic Psychology at the Stockholm School of Economics, Sweden, says policy-makers should try to learn more about mechanisms affecting their decision making. “And ask experts who are not directly personally affected by or responsible for the losses for help,” he adds, in order to mitigate conflicts of interest. “The mechanisms are always there and make us behave in a similar way in similar situations, repeatedly, unless we learn about and deal with these mechanisms.”

Featured image credit: vladgrin via Fotolia.com

Arran Frood

Freelance Science Journalist at EuroScientist
Arran is currently a Freelance journalist for New Scientist, Nature, BBC Online, Focus, Euroscientist.com, The Lancet, The Independent, The Times, The Daily Telegraph, Youris.com, The Khaleej Times, Nature Medicine, Chemistry & Industry.
He also has experience with Nature Publishing Group and Science Photo Library and also works as a Digital Content Producer at BBSRC.
Arran Frood

Leave a Reply

Your e-mail address will not be published. Required fields are marked *