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The fellowships, managed by the Royal Society of New Zealand, seek to attract, retain and grow New Zealand's most talented early to mid-career researchers, and the funding is provided over five years.
A total of 11 fellowships were awarded this year throughout the country.
Dr Olivia Faull, now at the University of Zurich, Switzerland, is a graduate of both Otago University and Oxford University, having gained a DPhil from the latter in 2015.
She has been chosen for research investigating the communication between brain and body, to develop better coping mechanisms for people who suffer from anxiety.
Her project will build on breathing-related measurement techniques and innovative computational models she has already developed, and she will return to Otago to take up the fellowship.
Dr Scarf, of the Otago psychology department, will undertake research examining loneliness, social identity and the sense of belonging, a Royal Society spokesman said.
This project will investigate the benefits of belonging by collecting data from a diverse range of populations to help gain a better understanding of social connection and to rethink the role of belonging in our physical and mental health.