A few months ago the Center for European Economic Research, known as ZEW, received a visit that may well have made its management slightly nervous. A team of 10 examiners arrived and began assessing the performance of the institute in Mannheim.
The monitors were sent by the Leibniz Association, a network of some 90 independent research institutes. It is tasked by the federal government with examining whether scientific institutions are worth the money they receive.
“The performance of the economic research institutes has gotten significantly better in recent years.”
For two days at ZEW, the examiners listened to explanations of strategy and fields of research. They gathered information about scientific services and programs, third-party funds and junior staff development. They inquired into publishing in top journals, consultation offered to politicians and the “appropriateness of facilities and personnel.”
Since then, ZEW has had to wait. In November, the Leibniz Association evaluation committee will discuss the findings and draw up recommendations. Another part of the association, the Senate, will have to approve the decision.
Some six weeks later, a commission of the federal and state governments will decide whether ZEW, under the leadership of its new president Achim Wambach, will continue to be financed with tax money. (Insiders say it’s a sure thing).
All German institutes of economic research must undergo this procedure every seven years. If the monitors are not absolutely convinced, the period can be reduced to five or even four years.
Up to now, federal and state governments have always followed the recommendations of the Leibniz Association, even when it came to a negative decision.
In 2004, for example, a devastating evaluation resulted in ending support for the Hamburgische Welt-Wirtschafts-Archiv. As a consequence, the institute was eventually dissolved and forced to merge with the Kiel-based German National Library of Economics two years later.
In 1998, the Ifo Institute for Economic Research had to provisionally accept demotion from a research institute to a service institute — a move that cost it about 25 percent of financing and 50 positions.
In 2007 and 2011, the Leibniz detectives found “significant leadership deficits” at the Halle Institute for Economic Research. Since then, the sole eastern German economic research institute has been under observation.
But overall, institutes have been improving.
“The performance of the economic research institutes has gotten significantly better in recent years,” said Hans Spada, a Freiburg University professor and head of the Leibniz evaluation committee. “When there were problems, these were mostly on the administrative level.”
Doing colleagues a favor by issuing a favorable report is supposed to be avoided as much as possible. “We place high demands on the independence of the monitors,” said Mr. Spada.
The group of evaluators is chosen from outside; its members (who don’t necessarily have to be economists) come from neither the surroundings of the institute under evaluation nor the Leibniz Association.
Moreover, the monitored institutions have only a limited say regarding appointments to the assessment group.
“They are not allowed to appoint friendly examiners, but only to make suggestions,” said Mr. Spada. “As a rule, only a third of proposed members are accepted.”
Nonetheless, the assessment process can be controversial. Sometimes monitors complain they are flooded with disordered material, which makes it difficult to get a clear view of central performance.
On the other hand, there has repeatedly been criticism in recent years of the examiners’ priorities. Highly complex, theoretical works are said to be overvalued, while consultation services to politicians are disregarded.
Mr. Spada, however, said the examiners “have found a reasonable balance.”
For example, the monitors look at which surveys the institutes have participated in: Whoever worked on the extensive report on economic growth for the federal government gets a big plus.
The Kiel Institute for the World Economy can take particular pleasure in this. After a pause of several years, it has resumed issuing expertises on economic growth – just in time for its next round of evaluations scheduled for 2018.
This article first appeared in the business weekly WirtschaftsWoche and was written by Bert Losse. To contact the author: email@example.com