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Household Innovation and R&D: Bigger than You Think

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  • Daniel Sichel
  • Eric von Hippel

Abstract

Despite recent interest in measuring household activities, investment in household R&D (or household innovation), has not been considered in any of the literatures on national‐accounts‐style measurement. Household R&D is the dedication of household resources to creating a product or process that will generate a service flow in the future; that is a household intangible asset. This paper takes a step toward valuing household innovation in the U.S. by developing time series of nominal and real investment and capital stocks for household R&D. We find that household investment in R&D was more than 11 percent of R&D funded by the private business sector in 2017 and about half of what businesses spent on R&D to develop new products for consumers. If household R&D were judged to be in scope for GDP, GDP would have been 0.2 percent higher in 2017. We conclude that household R&D is important and warrants closer attention.

Suggested Citation

  • Daniel Sichel & Eric von Hippel, 2021. "Household Innovation and R&D: Bigger than You Think," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(3), pages 639-658, September.
    • Handle: RePEc:bla:revinw:v:67:y:2021:i:3:p:639-658
    DOI: 10.1111/roiw.12477
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    References listed on IDEAS

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