It’s now tougher (and more expensive) to find big ideas

Big ideas are getting harder and harder to find, and innovations have become increasingly massive and costly endeavors, according to new research.

As a result, tremendous continual increases in research and development will be needed to sustain even today’s low rate of economic growth.

This means modern-day inventors—even those in the league of Steve Jobs—will have a tough time measuring up to the productivity of the Thomas Edisons of the past.

“The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it.”

Nicholas Bloom, senior fellow at the Stanford Institute for Economic Policy Research and coauthor of a paper released this week by the National Bureau of Economic Research, contends that so many game-changing inventions have appeared since World War II that it’s become increasingly difficult to come up with the next big idea.

“The thought now of somebody inventing something as revolutionary as the locomotive on their own is inconceivable,” Bloom says.

“It’s certainly true if you go back one or two hundred years, like when Edison invented the light bulb,” he says. “It’s a massive piece of technology and one guy basically invented it. But while we think of Steve Jobs and the iPhone, it was a team of dozens of people who created the iPhone.”

To better understand the nation’s sluggish economic growth, Bloom and his three coauthors—SIEPR senior fellow Chad Jones, Stanford doctoral candidate Michael Webb, and MIT professor John Van Reenen—examined research productivity at an aggregate national level as well as within three swaths of industry: technology, medical research, and agriculture. For another measure, they also analyzed research efforts at publicly traded firms.

Their paper follows a common economic concept that economic growth comes from people creating ideas. In other words, when you have more researchers producing more ideas, you get more economic growth.

But Bloom and his team find a not-so-rosy imbalance. While research efforts are rising substantially, research productivity—or the ideas being produced per researcher—is declining sharply.

“The economy has to double its research efforts every 13 years just to maintain the same overall rate of economic growth.”

So the reason the US economy has even grown at all is because steep increases in research and development have more than offset the decline in research productivity, the study finds.

Specifically, the number of Americans engaged in R&D has jumped by more than twentyfold since 1930 while their collective productivity has dropped by a factor of 41.

“It’s getting harder and harder to make new ideas, and the economy is more or less compensating for that,” Bloom says. “The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it.”

The paper spelled it out bluntly in numbers: “The economy has to double its research efforts every 13 years just to maintain the same overall rate of economic growth.”

Less optimism

Bloom initiated this research a year ago, inspired to dig deeper after speaking on a panel at the SIEPR economic summit that discussed “Is the Productivity Slowdown for Real?” He admits the paper—and its somewhat pessimistic analysis—has dampened his previous, more optimistic stance.

“I’ve changed my mind,” Bloom says. “Pretty much all mainstream economists have become rather depressed about productivity growth.”

At the 2016 SIEPR Summit, Bloom was more positive about the nation’s productivity, saying its declining rate was only a temporary effect of the financial crisis of 2008. He even caricatured ways of looking at US productivity levels and contended the up-and-down swings between 1950 and 2010 did not necessarily signal a long-running trend of slow productivity growth.

A year ago, Bloom recalls, “I thought we were recovering from a huge global recession and we’re about to turn around.”

Now, his perspective takes into account new insights that research productivity—one of the underlying components of economic growth—has been clearly dropping for decades.

“This paper says productivity growth is slowing down because ideas are getting harder to find,” Bloom says.

These innovative countries outperform their peers

While the study builds on the earlier work of Jones and others on R&D, the new paper also weaves a tight connection between empirical data on what’s happening in the real world and growth models.

The robust finding of declining idea productivity has implications for future economic research, the paper concludes. The standard assumption in growth models has historically been a constant rate of productivity, and “we believe the empirical work we’ve presented speaks clearly against this assumption,” it states.

Moore’s Law

Everywhere they looked, the researchers say they found clear evidence of how exponential investments in R&D have masked the decline in productivity. The tech industry’s signature guidepost, Moore’s Law, which marked its 52nd year in April, is a prime example.

Introduced in 1965 by Gordon Moore, the co-founder of computer chip giant Intel, the theorem postulates that the density of transistors on an integrated circuit would double roughly every two years, doubling computing power.

Moore’s Law has certainly played out—the computing power on a chip today is remarkable compared to even a decade ago—but the study found that the research effort behind the chip innovations rose by a factor of 78 since 1971.

To spur innovation, teach A.I. to find analogies

Put another way, the number of researchers required today to maintain that innovative pace is more than 75 times larger than the number that was required in the early 1970s.

“The constant exponential growth implied by Moore’s Law has been achieved only by a staggering increase in the amount of resources devoted to pushing the frontier forward,” the paper states.

Other industries also exhibited falloffs in idea productivity.

For instance, to measure productivity in agriculture, the study’s coauthors used crop yields of corn, soybeans, wheat, and cotton and compared them against research expenditures directed at improving yields, including cross-breeding, bioengineering, crop protection, and maintenance.

The average yields across all four crops roughly doubled between 1960 and 2015. But to achieve those gains, the amount of research expended during that period rose “tremendously”—anywhere from a threefold to a more-than-25-fold increase, depending on the crop and specific research measure.

On average, research productivity in agriculture fell by about 4 to 6 percent per year, the study finds.

A similar pattern of greater input but less output followed in medical research. The study’s authors analyzed R&D spending on new, federally approved drugs against life expectancy rates as a gauge of productivity. They also examined decreases in mortality rates of cancer patients against medical research publications and clinical trials.

The empirical findings on breast and heart cancer suggest that at least in some areas, “it may get easier to find new ideas at first before getting harder,” the paper states.

Turning its focus to publicly traded companies, the study found a fraction of firms where research productivity—as measured by growth in sales, market capitalization, employment, and revenue-per-worker productivity—grew decade-over-decade since 1980. But overall, more than 85 percent of the firms showed steady, rapid declines in productivity while their spending in R&D rose.

The analysis found research productivity for firms fell, on average, about 10 percent per year. It would take 15 times more researchers today than it did 30 years ago to produce the same rate of economic growth.

Source: May Wong for Stanford University

The post It’s now tougher (and more expensive) to find big ideas appeared first on Futurity.

Why some 19th century immigrants went back to Europe

Moving back to Europe after emigrating to the United States was one strategy Norwegian immigrants used to lessen their poverty, research suggests.

Today’s conversation about immigration and the role of immigrants in America is not so different from the conversations that took place more than 100 years ago, when European immigrants settled in cities and on farms in the United States.

Ran Abramitzky, an economist at Stanford University, has spent the past decade analyzing data on immigrants in the United States between 1850 and 1913—the time of the country’s largest wave of migration.

“Moving permanently to the New World was one strategy that poor European immigrants used to achieve economic success.”

Norwegian immigrants who returned home in the late 19th and early 20th centuries were more likely to have held lower-skilled occupations, compared with both Norwegians who never moved and those who stayed in the United States. But upon returning to Norway, the return migrants were better off than those who had never moved and usually held higher-paying jobs.

The findings are contrary to the popular belief that return migration mostly resulted from bad shocks, such as an illness or unemployment, says Abramitzky, an associate professor of economics and coauthor of the article in the Industrial and Labor Relations Review. Instead, it appears that return migrants already hailed from poorer backgrounds before their move.

“Moving permanently to the New World was one strategy that poor European immigrants used to achieve economic success. This research suggests that temporary movement to the United States in order to accumulate savings and invest in the home country was another option available to the poor.”

The Age of Mass Migration

The new study on return migrants is the latest piece in a larger research project, which Abramitzky and colleagues began about 10 years ago, on immigration in the US between 1850 and 1913.

About 30 million Europeans immigrated during the period—the Age of Mass Migration—as America maintained open, largely unrestricted borders for European migrants until about 1914. By 1910, 22 percent of the country’s labor force was foreign-born, compared to 17 percent of today’s working population.

But, the same period also saw a high rate of return migration—one in three immigrants returned to their home country.

To learn which immigrants moved back and how they fared economically, researchers needed comprehensive data on immigrants from a single country.

“It is challenging to study these types of questions because systematic data on return migrants are not typically collected,” Abramitzky says.

Back to Norway

But Norway, which experienced a high rate of out-migration during this period, was a unique case. The country’s 1910 census asked respondents whether they spent some time in the United States, and, if so, the dates of their arrival and departure, last state of residence, and last occupation held.

Because Norway recently released digital versions of those census datasets, Abramitzky chose to focus on the Scandinavian country, conducting an unprecedented analysis of individual data on return migrants to Europe during that period.

Researchers linked the American and Norwegian census data sets to compare Norwegian migrants still living in the US in 1910 with Norwegian immigrants who returned after a couple of years—as well as to Norwegians who stayed in Norway throughout this period.

“If we want to know how today’s newcomers will fare, we can find important clues by examining what happened to those who arrived on our shores during the greatest surge of immigration in US history.”

Immigrants who held low-paid occupations or who came from rural parts of Norway were more likely to come back after moving to America. Once back home, the return migrants held higher-paid occupations than the Norwegians who never moved, despite being from poorer backgrounds.

That return migrants climbed to a higher rung on the occupational ladder may have been the result of savings accrued in the US. Many return migrants worked as farmers, often in their town of birth. When these men—who had started out as poor farm laborers—returned to Norway, they were more likely than the non-movers to purchase and work on their own farms, a more lucrative profession made possible by the increased land they were able to buy with their savings.

These temporary moves might have been necessary, because it was difficult to borrow money in Norway, which was not as advanced financially as the US.

How does identity work for immigrants in Europe?

During the Age of Mass Migration, politicians and the public raised questions about immigrants that are similar to those discussed today. Can immigrants successfully integrate into America’s society and economy? Or do they remain isolated long after they settle?

Abramitzky’s past work on immigrants from 16 sending European countries provides some clues.

A 2014 study showed that European immigrants arrived in the US with occupations comparable to native-born Americans, and his 2016 research on cultural assimilation documented that immigrants who arrived in the early 20th century chose less foreign names for their sons and daughters as they spent more time in the United States.

“If we want to know how today’s newcomers will fare, we can find important clues by examining what happened to those who arrived on our shores during the greatest surge of immigration in US history,” Abramitzky says.

“Comparing our findings with contemporary studies can illuminate the effect of modern immigration policy on migrant selection and migrant assimilation.”

Leah Boustan of Princeton University and Katherine Eriksson of the University of California, Davis, are coauthors of the study.

Source: Stanford University

The post Why some 19th century immigrants went back to Europe appeared first on Futurity.

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design employment • Re: Got laid off… want to relocate, but where to?

So i have to disagree, I was given very much the same information as Yo had been given early in my career. I am now close to 50 and (still 4 years but close enough) and my job opportunities are more then they where over the last 15 years. And i have the ability to move into different areas, with my creative thinking and ability to strategically look at innovative options and solutions. And this goes beyond developing physical products. By sixty i hope that i am retired and have gone back to consulting and sharing my knowledge of design and development at a high level to help companies speed up their leanings and reduce their mistakes. (or i could be in a retirement home)….. I have also worked with some designers who are at 60 plus and they are at the top of their career and extremely respect by the companies that retain the them. In the end we all have different experiences and mental models which shape our perception.