In 1978, physicist Richard A. Muller of Berkeley was awarded two distinguished prizes—the Waterman Award and the Texas Instruments Foundation Founders’ Prize—for his research on cosmic rays and adaptive optics. The event was particularly notable because Muller had been refused support for this work after peer review by the National Science Foundation, the Department of Energy, the National Aeronautics and Space Administration, and the Department of Defense.

Many innovative research projects fail to pass muster under the peer-review system, and, as in this case, the work has to be done without specific funding. Is this a failure of the peer-review system? What are the system’s other costs? The questions are especially appropriate because peer review is almost universally required now for decisions on research proposals, journal publications, and promotions for academic people.

There are substantial costs to peer review in terms of the time investment. A study by NSF in...

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