I wrote recently about a study from the Stanford Institute for Economic Policy Research that highlighted how truly novel ideas are not only harder and harder to come by, but they tend to be ever more expensive to explore. It creates the impression that our innovative capabilities pale in comparison to those of bygone eras.
It’s a topic examined by a second Stanford paper, which utilizes big data to analyze millions of patent documents to rank the importance of every patent registered in the past 200 years.
The analysis reveals the largest surge in innovation in the early to mid 1800s. It was a time where inventions emerged in areas such as manufacturing and transportation. We’re talking innovations such as vulcanized rubber and the elevator.
This was then followed by a second substantial wave in the late 1800s, with innovations such as the telephone, internal combustion engine and incandescent light bulb.
The team hope that their work provides an insightful new metric that will allow innovation trends to be spotted, and from there how innovation is affected by economics, politics and other factors.
“Economists agree on the importance of technological progress when it comes to fostering economic activity, but we don’t really have many good ways of measuring it, especially over a long horizon,” they say. “It’s important to have robust ways of measuring technological innovation to understand how large changes in innovative activity move with policy changes. Is the right amount of innovation taking place? Is it shifting from large firms to small ones or vice versa? Is it coming from public firms or private firms? Is there a shift toward or away from universities or government agencies? These are all first-order questions and our metric opens avenues to study them.”
Ideas were tested according to two main metrics. The first explored how much they diverged from what came before, whilst the second examined how influential they were in what came later. The research trawled the patent database for inventions with terms that rarely appeared in previous patents, but would appear frequently in future ones.
In total they analyzed over 9 million patents to determine the ratio between the two core metrics. They believe their approach provides a welcome new approach in measuring innovation, especially as it adds nuance to the traditional approach of simply measuring citations, which weren’t consistently included in records until the 1940s.
By using textual analysis, the team believe their results are very robust and easily comparable with other methods for measuring innovations historically. Indeed, the results of the analysis matched up well with a reputable list of the 110 most important American patents.
Whilst some obvious inventions, such as the telephone and aeroplane featured highly in the rankings, so too did less heralded inventions such as condensed milk, which was rated as more influential than the likes of the television and semiconductor.
In addition to finding clear trends in innovation, the analysis also found evidence of the economic boost innovation provides. It showed clear links between technological innovation and productivity. The team hope that their work will contribute towards a deeper understanding of the conditions within which innovation can thrive.