are ideas getting harder to find? - stanford universityweb.stanford.edu/~chadj/slides-ideas.pdf ·...
TRANSCRIPT
![Page 1: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/1.jpg)
Are Ideas Getting
Harder to Find?
Bloom, Jones, Van Reenen, and Webb
March 2018
1 / 63
![Page 2: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/2.jpg)
Overview
• New stylized fact:
Exponential growth is getting harder to achieve.
Economic
growth=
Researchproductivity
×Number of
researchers
e.g. 2% or 5% ↓ (falling) ↑ (rising)
• Aggregate evidence: well-known (Jones 1995)
• This paper: micro evidence
◦ Moore’s law, Agricultural productivity, Medical innovations
◦ Firm-level data from Compustat
Exponential growth results from the rising research effort
that offsets declining research productivity.
2 / 63
![Page 3: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/3.jpg)
Conceptual Framework
3 / 63
![Page 4: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/4.jpg)
Basic Framework
• Key equation in many growth models:
At
At= α St
where At/At = TFP growth
and St = the number of researchers
• Define ideas to be proportional improvements in productivity.
◦ Since we don’t observe ideas directly ⇒ just a normalization
◦ Quality ladder models assume this
• Productivity in the Idea Production Function:
Research Productivity :=At/At
St=
# of new ideas
# of researchers
4 / 63
![Page 5: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/5.jpg)
Null hypothesis: Research productivity = α ⇒ constant!
• Standard endogenous growth ⇐⇒ constant research
productivity
◦ Permanent research subsidy ⇒ permanent ↑ growth
• Motivations for the paper
◦ Inherently interesting: Is exponential growth getting harder
to achieve?
◦ Can a constant number of researchers generate constant
exponential growth?
◦ Informative about the growth models we write down
5 / 63
![Page 6: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/6.jpg)
Aggregate Evidence
• What if research productivity declines sharply within every
product line, but growth proceeds by developing new products?
◦ Steam, electricity, internal combustion, semiconductors,
gene editing, etc.
◦ Maybe research productivity is constant via the discovery of
new products?
• But the extreme of this ⇒Romer (1990)!
• Standard problem:
◦ Growth is steady or declining (here BLS TFP growth)
◦ Aggregate R&D rises sharply (here NIPA IPP deflated by the
nominal wage for 4+ years of college/postgrad education)
6 / 63
![Page 7: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/7.jpg)
Aggregate Evidence
1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s0%
5%
10%
15%
20%
25%
U.S. TFP Growth
(left scale)
Effective number of
researchers (right scale)
GROWTH RATE
0
5
10
15
20
25FACTOR INCREASE SINCE 1930
7 / 63
![Page 8: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/8.jpg)
Aggregate Research Productivity
1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 1/64
1/32
1/16
1/8
1/4
1/2
1
Research productivity
(left scale)
Effective number of
researchers (right scale)
INDEX (1930=1)
1
2
4
8
16
32INDEX (1930=1)
Research effort: 23x (+4.3% per year)
Research productivity: 41x (-5.1% per year)
8 / 63
![Page 9: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/9.jpg)
The Importance of Micro Data
• In response to the “scale effects” critique:
◦ Howitt (1999), Peretto (1998), Young (1998) and others
◦ Composition bias: perhaps research productivity within
every quality ladder is constant, e.g. if number of products
Nt grows at the right rate:
Ait
Ait= α Sit (*)
⇒ Sit =St
Ntinvariant to scale, but responds to subsidies
– Aggregate evidence would then be misleading
– Permanent subsidies would still have growth effects.
• Key to addressing this concern:
Study (*) directly ⇒ research productivity within a variety!
9 / 63
![Page 10: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/10.jpg)
Extensions to the
basic framework
10 / 63
![Page 11: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/11.jpg)
The “Lab Equipment” Approach
• Setup
Goods production Yt = Kθt (AtL)
1−θ
Resource constraint Yt = Ct + It + Rt
Idea production At = αRt
• Solution, with st := Rt/Yt
Yt =(
Kt
Yt
)θ
1−θ
AtL
At = αRt = αstYt = αst
(
Kt
Yt
)θ
1−θ
AtL.
• Therefore:
At
At= α
(
Kt
Yt
)θ
1−θ
× stL
research productivity “researchers”
11 / 63
![Page 12: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/12.jpg)
What if the R&D input is expenditures instead of people?
• Key: Deflate R&D spending by the nominal wage to get the
“effective” number of researchers.
◦ Gives the “researchers” term in lab equipment model
◦ Additonally allows heterogeneous researchers — weights by
their wage ⇒ efficiency units
• The maintains the appropriate null hypothesis:
◦ Constant “effective” research generates constant
exponential growth ⇒ fully endogenous growth
◦ In contrast: Naively dividing At
Atby R will incorrectly show a
decline in “research productivity” even w/ endog. growth
• Empirically: the nominal wage = mean personal income from
CPS for males with 4 or more years of college/post education
12 / 63
![Page 13: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/13.jpg)
Stepping on Toes?
• Perhaps the idea production function depends on Sλt rather than
on St?
• We focus on λ = 1 for three reasons:
◦ Only affects the magnitude of whatever trend we find — easy
to multiply by your preferred value (appendix table λ = 3/4)
◦ R&D spending already controls for heterogeneity in talent
◦ No consensus on the right value of λ
• Statements like “we have to double research every T years to
maintain constant growth” are invariant to λ
13 / 63
![Page 14: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/14.jpg)
Selection of Our Cases and Measures
• How did we pick the cases to study and report?
◦ Require good measures of idea output and research input
◦ Also considered
– internal cumbustion engine, airplane travel speed
– Nordhaus (1997) price of light
– solar panel efficiency
– price of human genome sequencing
◦ Problem: Could not measure research input...
• How do we choose our idea output measure?
◦ Need to match up well with research input.
◦ Highly robust — results driven by “no trend” versus “trend”
14 / 63
![Page 15: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/15.jpg)
Moore’s Law
15 / 63
![Page 16: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/16.jpg)
The Steady Exponential Growth of Moore’s Law
16 / 63
![Page 17: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/17.jpg)
Moore’s Law and Measurement
• Idea output: Constant exponential growth at 35% per year
Ait
Ait= 35%
• Idea input: R&D spending by Intel, Fairchild, National
Semiconductor, TI, Motorola (and 25+ others) from Compustat
◦ Pay close attention to measurement in the 1970s, where
omissions would be a problem...
◦ Use fraction of patents in IPC group H01L
(“semiconductors”) to allocate to Moore’s Law
17 / 63
![Page 18: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/18.jpg)
Evidence on Moore’s Law
1970 1975 1980 1985 1990 1995 2000 2005 2010 20150%
35%
Effective number of
researchers (right scale)
GROWTH RATE
1
5
10
15
20 FACTOR INCREASE SINCE 1971
18 / 63
![Page 19: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/19.jpg)
Research Productivity for Moore’s Law – Robustness
Factor Average Half-life
Version decrease growth (years)
Baseline 18 -6.8% 10.3
(a) Narrow R&D 8 -4.8% 14.5
(b) Narrow (adj. congl.) 11 -5.6% 12.3
(c) Broad (adj congl.) 26 -7.6% 9.1
(d) Intel only (narrow) 347 -13.6% 5.1
(f) TFP growth (narrow) 5 -3.2% 21.4
(h) TFP growth (broad) 11 -5.6% 12.3
We have to double our research effort every decade
just to keep up with declining research productivity!
19 / 63
![Page 20: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/20.jpg)
Agricultural Innovation
20 / 63
![Page 21: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/21.jpg)
TFP Growth and Research Effort in Agriculture
1950 1960 1970 1980 1990 2000 20100
2
4
TFP growth, left scale
(next 5 years)
U.S. researchers
(1970=1, right scale)
Global researchers
(1980=1, right scale)
GROWTH RATE
1
1.5
2
FACTOR INCREASE
21 / 63
![Page 22: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/22.jpg)
Seed Yields for Corn, Soybeans, Cotton, Wheat
• Idea output:
◦ Realized yields per acre on U.S. farms (no TFP data)
◦ Approximately doubles since 1960
⇒ Ait
Ait≈ 2% (stable, or even declining slightly)
• Idea input: two measures, both show large increases
◦ Narrow: public and private R&D to increase biological
efficiency (cross-breeding, genetic modification,
insect/herbicide resistance, nutrient uptake)
◦ Broader: Also add in crop protection and maintenance R&D
(developing better herbicides and pesticides).
22 / 63
![Page 23: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/23.jpg)
Yield Growth and Research: Corn
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100%
4%
8%
12%
16%
Yield growth, left scale
(moving average)
Effective number of
researchers (right scale)
GROWTH RATE
0
6
12
18
24FACTOR INCREASE SINCE 1969
23 / 63
![Page 24: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/24.jpg)
Yield Growth and Research: Soybeans
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100%
4%
8%
12%
16%
Yield growth, left scale
(moving average)
Effective number of
researchers (right scale)
GROWTH RATE
0
6
12
18
24FACTOR INCREASE SINCE 1969
24 / 63
![Page 25: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/25.jpg)
Research Productivity for Agriculture: 1969–2010
Effective research Research productivityFactor Average Factor Average
Crop increase growth decrease growth
Seed efficiency only
Corn 23.0 7.8% 52.2 -9.9%
Soybeans 23.4 7.9% 18.7 -7.3%
Cotton 10.6 5.9% 3.8 -3.4%
Wheat 6.1 4.5% 11.7 -6.1%
+ crop protection
Corn 5.3 4.2% 12.0 -6.2%
Soybeans 7.3 5.0% 5.8 -4.4%
Cotton 1.7 1.3% 0.6 +1.3%
Wheat 2.0 1.7% 3.8 -3.3%
25 / 63
![Page 26: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/26.jpg)
Yield Growth and Research: Cotton
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100%
2%
4%
6%
8%
Yield growth, left scale
(moving average)
Effective number of
researchers (right scale)
GROWTH RATE
0
4
8
12FACTOR INCREASE SINCE 1969
26 / 63
![Page 27: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/27.jpg)
Medical Innovation
27 / 63
![Page 28: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/28.jpg)
New Molecular Entities Approved by the FDA
1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
10
20
30
40
50
60
YEAR
NUMBER OF NMES APPROVED
28 / 63
![Page 29: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/29.jpg)
New Molecular Entities
• Idea output: FDA approvals of new molecular entities. Usually 2
or 3 of these become blockbuster drugs
◦ Limitation: Simple counts do not adjust for quality
• Idea input: R&D spending measured by the Pharmaceutical
Researchers and Manufacturers of America survey.
◦ Includes research performed abroad by U.S. companies and
research performed in the U.S. by foreign companies.
◦ But not research performed abroad by foreign companies.
29 / 63
![Page 30: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/30.jpg)
Research Productivity for New Molecular Entities
1970 1975 1980 1985 1990 1995 2000 2005 2010 20151/16
1/8
1/4
1/2
1
Research productivity
(left scale)
Effective number of
researchers (right scale)
INDEX (1970=1)
1
2
4
8
16INDEX (1970=1)
30 / 63
![Page 31: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/31.jpg)
Better Micro Data? Disease Mortality
• Idea output: Years of life saved per 1000 people
◦ Based on declines in mortality (Vaupel and Canudas 2003)
d LE(a) =δi
δ1 + δ2
· LE(a) ·
(
−dδi
δi
)
.
◦ Three diseases: all cancers, breast cancer, heart disease
• Idea input: Scientific publications with the relevant Medical
Subject Heading (e.g. “Neoplasms”)
◦ Two approaches: all publications versus those documenting
clinical trials
31 / 63
![Page 32: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/32.jpg)
U.S. Life Expectancy Rises Linearly
1900 1920 1940 1960 1980 200045
50
55
60
65
70
75
80
At birth
(left scale)
At age 65
(right scale)
YEARS
13
14
15
16
17
18
19
20YEARS
32 / 63
![Page 33: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/33.jpg)
Mortality and Years of Life Saved: All Cancers
1975 1980 1985 1990 1995 2000 2005 20100.3
0.4
0.5
0.6
0.7
0.8
Years of life saved
per 1000 people (right scale)
Mortality rate
(left scale)
DEATH RATE
20
40
60
80
100
120YEARS
33 / 63
![Page 34: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/34.jpg)
Medical Research Effort: All Cancers
1960 1970 1980 1990 2000 2010 202025
100
400
1600
6400
25600
102400 Number of publications
Number for clinical trials
YEAR
RESEARCH EFFORT
34 / 63
![Page 35: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/35.jpg)
Research Productivity for Medical Research: All Cancers
Per clinical trial
Per 100 publications
1975 1980 1985 1990 1995 2000 2005 2010YEAR
1
2
4
8
16
32
YEARS OF LIFE SAVED PER 100,000 PEOPLE
35 / 63
![Page 36: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/36.jpg)
Research Productivity for Medical Research
Effective research Research productivityFactor Average Factor Average
Category increase growth decrease growth
New molecular entities 14.8 6.0% 4.9 -3.5%
All publications
Cancer, all types 3.5 4.0% 1.2 -0.6%
Breast cancer 5.9 5.7% 8.2 -6.8%
Heart disease 5.1 3.6% 5.3 -3.7%
Clinical trials
Cancer, all types 14.1 8.5% 4.8 -5.1%
Breast cancer 16.3 9.0% 22.6 -10.1%
Heart disease 24.2 7.1% 25.3 -7.2%
36 / 63
![Page 37: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/37.jpg)
Firm-Level Data from Compustat
37 / 63
![Page 38: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/38.jpg)
Firm-Level Data from Compustat
• Compute research productivity for each firm in Compustat since
1980
• Idea output:
◦ Decadal growth rates of sales revenue, market
capitalization, or employment
• Idea input: R&D expenditures
• Various robustness checks for sample selection (below)
38 / 63
![Page 39: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/39.jpg)
Histogram of Research Productivity and Effort across Firms
Only 3% of firms have
roughly constant
research productivity.
39 / 63
![Page 40: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/40.jpg)
Research Productivity using Compustat Data (weighted averages)
Effective research Research productivityFactor Average Factor Average
Sample increase growth decrease growth
Sales Revenue
2 dec. (1712 firms) 2.0 6.8% 3.9 -13.6%
3 dec. (469 firms) 3.8 6.7% 9.2 -11.1%
4 dec. (149 firms) 13.7 8.7% 40.3 -12.3%
Market Cap
2 dec. (1124 firms) 2.2 8.0% 3.4 -12.2%
3 dec. (335 firms) 3.1 5.6% 6.3 - 9.2%
4 dec. (125 firms) 7.9 6.9% 14.0 -8.8%
Employment
2 dec. (1395 firms) 2.2 8.0% 2.8 -10.3%
3 dec. (319 firms) 4.0 6.9% 18.2 -14.5%
4 dec. (101 firms) 13.9 8.8% 31.5 -11.5%
40 / 63
![Page 41: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/41.jpg)
Compustat Sales Data across 3 Decades: Robustness
Research productivityFactor Average
Case decrease growth
Benchmark (469 firms) 9.2 -11.1%
Winsorize g < .01 (986 firms) 7.9 -10.3%
Winsorize top/bottom (986 firms) 6.0 - 8.9%
Research must increase (356 firms) 11.6 -12.3%
Drop if any negative growth (367 firms) 17.9 -14.4%
Median sales growth (586 firms) 6.3 -9.2%
Unweighted averages (469 firms) 9.2 -11.1%
Revenue labor productivity (337 firms) 2.5 -4.5%
41 / 63
![Page 42: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/42.jpg)
Discussion
42 / 63
![Page 43: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/43.jpg)
Summary: Evidence on Research Productivity
Extent ofAverage annual Half-life Diminishing
Scope growth rate (years) Returns, β
Aggregate economy -5.3% 13 3.4
Moore’s law -6.8% 10 0.2
Agriculture (seeds) -5.5% 13 4.8
New molecular entities -3.5% 20 ...
Disease mortality -5.6% 12 ...
Compustat firms -11.1% 6 1.1
43 / 63
![Page 44: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/44.jpg)
Implications for Economic Growth
• Ideas are getting harder to find!
◦ Exponential growth is getting harder to achieve
◦ We have to double research effort every 13 years to
maintain constant growth.
• “Red Queen” result
◦ We have to “run” faster and faster to stay in the same place
(i.e. to maintain a constant growth rate)
◦ If the growth rate of research effort slows, economic growth
may slow
44 / 63
![Page 45: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/45.jpg)
Caveats: How could this interpretation be wrong?
• Composition bias: increase in R&D occurs within varieties, but
R&D toward inventing new varieties is constant and faces
constant research productivity?
◦ The one place where research productivity is constant is the
one place where R&D is not growing??? In equilibrium?
• Composition bias II: Even more varieties (e.g. within firms, within
corn, within computer chips) so that true research per variety is
actually constant?
• Mismeasured growth? Are growth rates actually increasing?
Would have to be substantial...
• Other factors? Rising regulation? Defensive R&D? Changing
emphasis away from chip speed or yield per acre or years of life?
45 / 63
![Page 46: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/46.jpg)
Why does research productivity fall so quickly for semiconductors?
• Consider Jones / Kortum / Segerstrom framework:
At
At= (αA−β
t ) · St
which implies
gA =gS
β
LR growth = the growth rate of researchers
deflated by the extent of diminishing returns, β
• Can measure β ≡ extent of diminishing returns
• Semiconductors has the least diminishing returns!
– It is just that we’ve expanded R&D so quickly...
46 / 63
![Page 47: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/47.jpg)
A clarification of endogenous growth theory, not a critique!
• Naive reading is that this is a criticism of endogenous growth
• Instead, I think it strongly supports the key insight: nonrivalry
◦ If you are satisfied with constant research productivity, there
is no need for nonrivalry!
◦ Fully rivalrous ideas can lead to constant exponential growth
with perfect competition (Akcigit, Celik, Greenwood 2016)
◦ But with declining research productivity, the increasing
returns implied by nonrivalry becomes essential
Exponential growth in research ⇒ exponential growth of ideas.
Increasing returns implied by nonrivalry ⇒
exponential growth in per capita income.
47 / 63
![Page 48: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/48.jpg)
Extra Slides
48 / 63
![Page 49: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/49.jpg)
U.S. Total Factor Productivity
1990 1995 2000 2005 2010 201585
90
95
100
105
110
115
Manufacturing
1990-2003: 1.6%
2003-2014: 0.2%
Private business sector
1990-2003: 1.2%
2003-2015: 0.7%
YEAR
TOTAL FACTOR PRODUCTIVITY (2000=100)
49 / 63
![Page 50: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/50.jpg)
Research Employment in Select Economies
1980 1985 1990 1995 2000 2005 2010 2015250
500
1000
2000
United States1981-2002: 3.2%2002-2014: 2.1%
European Union (15 countries)
1981-2002: 3.7%2002-2015: 3.1%
Japan
1981-2002: 3.3%2002-2015: 0.5%
YEAR
RESEARCH EMPLOYMENT (1000S, LOG SCALE)
50 / 63
![Page 51: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/51.jpg)
U.S. Crop Yields: Corn
1960 1970 1980 1990 2000 2010 202040
60
80
100
120
140
160
180
BUSHELS/ACRE
51 / 63
![Page 52: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/52.jpg)
Yield Growth and Research: Cotton
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100%
2%
4%
6%
8%
Yield growth, left scale
(moving average)
Effective number of
researchers (right scale)
GROWTH RATE
0
4
8
12FACTOR INCREASE SINCE 1969
52 / 63
![Page 53: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/53.jpg)
Research Productivity for Corn, Version 1 (biological efficiency only)
1965 1970 1975 1980 1985 1990 1995 2000 2005 20101/64
1/32
1/16
1/8
1/4
1/2
1
IDEA TFP
1
2
4
8
16
32
# OF RESEARCHERS
53 / 63
![Page 54: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/54.jpg)
Research Productivity for Corn, Version 2 (w/ crop protection)
1965 1970 1975 1980 1985 1990 1995 2000 2005 20101/16
1/8
1/4
1/2
1
IDEA TFP
1
2
4
8
# OF RESEARCHERS
54 / 63
![Page 55: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/55.jpg)
Mortality and Years of Life Saved: Heart Disease
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150.002
0.004
0.006
0.008
0.01
0.012
0.014
0.016
0.018Years of life saved
per 1000 people (right scale)
Mortality rate
(left scale)
DEATH RATE
120
130
140
150
160
170
180
190
200YEARS
55 / 63
![Page 56: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/56.jpg)
Medical Research Effort: Heart Disease
1960 1970 1980 1990 2000 2010 202025
100
400
1600
6400
25600
102400
Number of publications
Number for clinical trials
YEAR
RESEARCH EFFORT
56 / 63
![Page 57: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/57.jpg)
Research Productivity for Medical Research: Heart Disease
Per clinical trial
Per 100 publications
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015YEAR
4
8
16
32
64
128
256
YEARS OF LIFE SAVED PER 100,000 PEOPLE
57 / 63
![Page 58: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/58.jpg)
Mortality and Years of Life Saved: Breast Cancers
1975 1980 1985 1990 1995 2000 2005 20100.05
0.1
0.15
0.2
0.25
0.3
0.35
Years of life saved
per 1000 people (right scale)
Mortality rate
(left scale)
DEATH RATE
5
10
15
20
25
30
35YEARS
58 / 63
![Page 59: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/59.jpg)
Medical Research Effort: Breast Cancers
1960 1970 1980 1990 2000 2010 202025
50
100
200
400
800
1600
3200
6400
12800 Number of publications
Number for clinical trials
YEAR
RESEARCH EFFORT
59 / 63
![Page 60: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/60.jpg)
Research Productivity for Medical Research: Breast Cancers
Per clinical trial
Per 100 publications
1975 1980 1985 1990 1995 2000 2005 2010YEAR
1/2
1
2
4
8
16
32
64
128
256
YEARS OF LIFE SAVED PER 100,000 PEOPLE
60 / 63
![Page 61: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/61.jpg)
Compustat Distributions, Sales Revenue (3 Decades)
61 / 63
![Page 62: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/62.jpg)
Compustat Distributions, Sales Revenue (4 Decades)
62 / 63
![Page 63: Are Ideas Getting Harder to Find? - Stanford Universityweb.stanford.edu/~chadj/slides-ideas.pdf · Are Ideas Getting Harder to Find? Bloom, Jones, Van Reenen, and Webb ... Goods production](https://reader030.vdocuments.site/reader030/viewer/2022021719/5bab494909d3f27d588bc359/html5/thumbnails/63.jpg)
Main Results from Compustat (Sales Revenue)
1st decade 2nd decade 3rd decade 4th decade 1/64
1/32
1/16
1/8
1/4
1/2
1 Idea TFP
(left scale)Effective number of
researchers (right scale)
INDEX (INITIAL=1)
1
2
4
8
16INDEX (INITIAL=1)
63 / 63