Economists explore the consequences of steering technological progress

SINCE THE ancient Greeks, at least, people have recognised that civilisational progress tends to create havoc as well as opportunity. Economists have had little time for such concerns. To them, technological progress is the wellspring of long-run growth, and the only interesting question is how best to coax more innovation out of the system. But in the face of looming social challenges, from climate change to inequality, some are now asking whether, when it comes to innovation, what sort is as relevant as how much.

Early models of growth did not explain technological progress at all, treating it rather like manna from heaven. In the 1980s some economists worked to build endogenous-growth models that said where innovation came from. They explained it as the consequence of investment in research and development, increases in the stock of human capital, or the (temporary) extra profits that can be reaped by firms with new technologies. Other economists have focused more on data than on theory. “Who Becomes an Inventor in America? The Importance of Exposure to Innovation”, a paper published in 2018 in the Quarterly Journal of Economics, identifies factors that seem to encourage young people to become innovators. Children who grow up where innovation rates are high, for instance, are more likely to become inventors themselves.