Are Ideas Getting Harder to Find?

Nicholas Bloom, Charles I. Jones, John Van Reenen, Michael Webb

NBER Working Paper No. 23782
Issued in September 2017
NBER Program(s):Economic Fluctuations and Growth, Productivity, Innovation, and Entrepreneurship

In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and their research productivity. We present a wide range of evidence from various industries, products, and firms showing that research effort is rising substantially while research productivity is declining sharply. A good example is Moore's Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 18 times larger than the number required in the early 1970s. Across a broad range of case studies at various levels of (dis)aggregation, we find that ideas — and in particular the exponential growth they imply — are getting harder and harder to find. Exponential growth results from the large increases in research effort that offset its declining productivity.

A non-technical summary of this paper is available in the November 2017 NBER Digest.  You can sign up to receive the NBER Digest by email.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w23782

Published: Nicholas Bloom & Charles I. Jones & John Van Reenen & Michael Webb, 2020. "Are Ideas Getting Harder to Find?," American Economic Review, vol 110(4), pages 1104-1144. citation courtesy of