  When funding public goods, resources are often allocated via mechanisms that
resemble contests, especially in the case of research grants. A common critique
of these contests is that they induce ``too much'' effort from participants.
This need not be true if the effort in the contest is itself directed towards
the public good. This papers analyzes survey data on scientists' time use and
finds that scientists allocate their time in a way that is consistent with
fundraising effort (e.g., grant writing) having inherent scientific value --
scientists who spend more time fundraising do not spent significantly less time
on research even after conditioning on confounding factors. Theoretical models
of contests are used to show that the presence of such a positive effort
externality, where scientists generate social value when pursuing grants,
changes the relationship between competition and the aggregate productivity of
a grant contest. Ensuring that scientists exert socially valuable effort to
obtain grants is increasingly important as grant contests become more
competitive.
