Estimating the Purchasing Power of the NIH Grant

July 12, 2012

You are probably aware, DearReader, of the concept of inflation. This means that the amount of money that you pay today for a good or service is higher than the amount of money that you paid yesterday.

On average.

So for example, this US inflation calculator tells me that the purchasing power of $12,000 in 1972 has the purchasing power of $65,975.60 in 2012. This is a convenient set of figures if, for example, you are shooting the breeze with a senior faculty member* who started his or her Assistant Professor appointment in the early 70s. You may want to grapple with pay on even terms. Naturally, not every good or service has the same inflation rate and this is just one model/estimator. Jeans may cost less and houses may cost more. etc.

Moving along, we come to the discussion of NIH Grants. In the past I’ve posted the analysis that shows that the doubling of the NIH budget was rapidly un-doubled and fell back on the historical trend line. That analysis depended on the Biomedical Research and Development Price Index or BRDPI. This brings us to an interest in the purchasing power of the full modular R01. “Modular” refers to the specification of the budget for most NIH grant types in units of $25,000 in direct costs. These are the “modules”.

There has been a cap of $250,000 per year in direct costs since the 6/1/1999 initiation of this structure, if I have that right. You can ask for more money per year but then you revert to a line-item type budget (called “traditional budgeting”). The modular cap has not changed and, I assert, this limit affects the vast majority of NIH R01 proposals since there is high motivation (or has been, I may have touched on reasons for future changes before) to adhere to the modular grant structure. Overall, I do like the notion of the modular budgeting procedures because it keeps reviewers from ticky-tacking a bunch of irrelevancies about grants when they should focus on the science.

However, the use of a limit like this brings up the unpleasant inevitability of inflation.

Comrade PhysioProf has been noting that the real purchasing power of the R01 has been dropping due to inflation in the context of postdoctoral fellow demands for ever increasing salaries. He’s not alone in noticing. I offer today, a graphical depiction pulled from data provided by the NIH Office of Budget on the BRDPI.
I”ve taken their table of yearly adjustments and used those to calculate the increase necessary to keep pace with inflation (black bars) and the decrement in purchasing power (red bars). The starting point was the 2001 fiscal year (and the BRDPI spreadsheet is older so the 2011 BRDPI adjustment is predicted, rather than actual). As you can see, a full modular $250,000 year in 2011 has 69% of the purchasing power of that same award in 2001.

For those looking at the increasing numbers of applications being submitted presented in the prior post, you must include some understanding of this inflationary pressure in your thinking.

The second thing we’ve found here is the target number to restore spending parity.

In simple terms, we should now be advocating for an increase to $350,000 as the new modular cap.

__
*Particularly handy when said senior (or emeritized, retired) faculty members are members of one’s own family. just sayin.

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19 Responses to “Estimating the Purchasing Power of the NIH Grant”

  1. becca Says:

    Over the period of 2001-2011, only the pre-doc and NIH postdoc salaries for postdocs at levels 0 and 1 have outpaced the general inflation rate, using that calculator and the historical data on NIH stipends Berg posted. Predocs have had a 3% raise over that period, postdocs at level 0 and 1 have had a 7% raise over that period (adjusted for inflation). Postdocs at levels 3-7 make less in 2011 than in 2001, adjusted for the general rate of inflation.
    Also over that period, faculty salary caps did outpace inflation (by the tiniest of margins), although in 2012 that went down dramatically.

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  2. drugmonkey Says:

    Right but either way, the grants haven’t matched

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  3. Pinko Punko Says:

    Also, since NIGMS is maintaining funding by automatically busting 250K modulars down to 189K, that is really tough. On one level, I am glad that they do it because more awards is important (in my mind to maintain any sense of a functioning system), but productivity on what is really a 0.5 R01 is hard to get up to a historical level for a 1.0 R01.

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  4. Beaker Says:

    I heard a lot of funded PIs complaining that they can’t maintain the size of their research program in the face of decreased purchasing power and increased labor costs. One well-funded professor told me that she feared her lab of 11 would have to shrink down to 7 or 8 people. Call the Waaambulance.

    The well-funded PI suffers by having a smaller lab and perhaps lower scientific productivity. This may also reduce her ability to attract more funding in the future. The trainees asked to leave the lab suffer more because they go from “poorly paid” to “unemployed.” The only ones who escape are the older tenured professors who are winding down their labs anyways (or should be but are not). They can just hang around and pad their pensions for a few more years before retirement. As usual, when a pyramid scheme collapses, the only winners are the ones who got in early.

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  5. becca Says:

    The general US inflation calculator tells me that 250k in 2001 is 317k in 2011; this would be less than the 350k you suggest using the BRDPI. So what does this tell us?
    Whatever costs the BRDPI tracks that imply biomedical research inflation is more than regular inflation are not attributable to trainee stipends, unless perhaps if we have radically more level 0 and 1 postdocs relative to other trainees in 2011 compared to 2001.
    I get that R01s don’t keep pace with inflation. Neither does the total NIH budget. GDP grows, tax revenue does not. Vote better.

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  6. Joe Says:

    Don’t write modular R01’s. Request enough funds for a reasonable number of people and a reasonable amount of salary support in a non-modular budget. It will likely be in the $300 – 350 k range. If you ask for too much salary support or too much travel money, you are likely to get slapped down. Otherwise, reviewers have a hard time explaining why your budget should be reduced, and they just write “recommend as requested” in the box.

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  7. Pinko Punko Says:

    Nope, they just say “reduce to modular” after someone says “budget seems high”- that is all there is.

    Yes, the collapse of the system is terrible. It is not fair, it is not optimal. It cannot be magically fixed with no money.

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  8. miko Says:

    I’m assuming most of the BRDPI can be attributed to Bio-Rad charging $100 for 50 cents worth of plexiglass and glue.

    My impression is that larger, better funded labs are far more wasteful in terms of ridiculous shit-buying: pre-cast gels, duplicate equipment that could easily be shared, duplicate equipment they didn’t know they already owned. Labs >8 or so seem to lose cost-effectiveness because PIs tend to be ridiculously inept “small business” managers no matter how good they are at managing the research.

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  9. drugmonkey Says:

    faculty salary caps did outpace inflation (by the tiniest of margins), although in 2012 that went down dramatically.

    The salary cap prediction of the population of PI salaries is WAAAAAAY less predictive than the NRSA postdoctoral scale is of the population of postdoc salaries. You understand this, right?

    Whatever costs the BRDPI tracks that imply biomedical research inflation is more than regular inflation are not attributable to trainee stipends,

    ffs, stop projecting. Nobody is blaming the inflation problem exclusively on trainee salaries. It contributes, yes, and to a high degree given the relative proportion of personnel expenditures on typical grants. but there are other factors at play. You are tilting at straw figures here. Stagnation of postdoc salaries at 2001 levels wouldn’t fix the structural problem of never changing the modular limit.

    I am glad that they do it because more awards is important

    Really? How so? Why is it good to keep two labs funded at the level that they can barely do anything beyond keep a postdoc salary afloat when one lab could have enough to do some actual research?

    Otherwise, reviewers have a hard time explaining why your budget should be reduced, and they just write “recommend as requested” in the box.

    For those of us who have had the majority of our grant writing in modular space it is a little nervewracking to go above the limit. I, even now, have the tickle in the back of my mind that worries about reviewers seeing my proposals as too greedy…. it is what it is. and there will be no comfort level until we come out of the other side of this episode and all of a sudden $389K proposals are no biggie and hardly even draw comment.

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  10. On the study sections I have experience with, budgets up to about $325,000 per year direct costs are never remarked upon when they are submitted by established PIs. Newbies trying to get their first R01, of course, get hammered if they try to go non-modular. We had one case where a new PI basically cried in her budget justification that her institution forced her to submit such a large budget and please don’t blame her.

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  11. The Third Reviewer Says:

    “I’m assuming most of the BRDPI can be attributed to Bio-Rad charging $100 for 50 cents worth of plexiglass and glue.”

    *THIS*

    Yes I got sick of hearing about how my mentor did things “back in the day,” but it sure is cheaper than buying the Delux Maxx High Efficiency kits from InvitroBioGenMega.

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  12. pablito Says:

    As an established PI, I was fortunate to just get a grant funded through NCI. Based on a reviewer comment, they first cut the non-modular budget to 250K, and then chopped another 17% off of that. End result was a 43% reduction from the requested budget.

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  13. becca Says:

    “The salary cap prediction of the population of PI salaries is WAAAAAAY less predictive than the NRSA postdoctoral scale is of the population of postdoc salaries. You understand this, right?”
    HA. Yes of course.

    ” Nobody is blaming the inflation problem exclusively on trainee salaries. “
    You might not be. My grad advisor liked to complain about supplies and especially mouse work costing more each year, actually. That said, implying Overpaid Whinydocs are The Problem In NIH Research is a favorite pastime of a particular co-blogger who shall remain obvious.

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  14. Pinko Punko Says:

    heh. Overpaid Whinydocs.

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  15. drugmonkey Says:

    Yo! people! data over here!

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  16. […] place 500-million-year-old gene in modern organism Estimating the Purchasing Power of the NIH Grant Your Favorite (Sexy!) Dinosaur Gene-swapping vaccines spawn lethal poultry virus (the headline […]

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  17. […] the purchasing power of the research grant dollar has declined, yet the modular budget cap (currently $250,000) hasn’t […]

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  18. […] you spy a slight trend for increasing numbers of grants per investigator over time, I refer you to my analysis of the real purchasing power of the full modular ($250K in direct cost per year) R01. The short version is that the full-modular […]

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  19. […] full-modular has not been adjusted with inflation. And the purchasing power is substantially eroded compared with a mere 15 years ago when they started the new budgeting […]

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