A new NBER paper asks why universities reward faculty on the basis of research productivity despite making most of their money from teaching. One theory is that top researchers being located in an institution increases the signalling value of the degrees awarded in the Institution. Another is that screening faculty on the basis of good teaching is very difficult and that screening them on the basis of research is more feasible and that good researchers are likely to be good teachers and to transmit knowledge at a much higher level than faculty who are not research active. A question that the paper leaves open but is an important one is what is best for students and society in terms of the allocation of university budgets. Should we be focusing on getting more teaching staff and having them spend more time in the lecture hall and classroom or more on attracting top research staff to improve the prestige of institutions and facilitate students being influenced by top researchers?