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Innovation: Meager Private Gains, Enormous Social Gains

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  • Baumol William

Abstract

There is strong evidence that invention is an activity that is very risky for the inventor and that those who participate in the invention process, taken as a group, obtain a minuscule share of the benefits. Nevertheless, the evidence also indicates that the social benefits of invention in recent centuries have been enormous. Yet, the relatively few examples of enormous payoffs to the inventors and their investors may serve, like the multimillion dollar prizes offered by some lotteries, to stimulate a level of inventive activity that may even be close to the social optimum.

Suggested Citation

  • Baumol William, 2011. "Innovation: Meager Private Gains, Enormous Social Gains," Entrepreneurship Research Journal, De Gruyter, vol. 1(4), pages 1-7, October.
    • Handle: RePEc:bpj:erjour:v:1:y:2011:i:4:n:1
    DOI: 10.2202/2157-5665.1056
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Thomas Astebro, 2003. "The Return to Independent Invention: Evidence of Risk Seeking, Extreme Optimism or Skewness-Loving," Post-Print hal-00480030, HAL.
    3. William D. Nordhaus, 2004. "Schumpeterian Profits in the American Economy: Theory and Measurement," NBER Working Papers 10433, National Bureau of Economic Research, Inc.
    4. William J. Baumol, 2013. "The Microtheory of Innovative Entrepreneurship," Journal of Economic Sociology, National Research University Higher School of Economics, vol. 14(3), pages 96-108.
    5. Thomas Astebro, 2003. "The Return to Independent Invention: Evidence of Unrealistic Optimism, Risk Seeking or Skewness Loving?," Economic Journal, Royal Economic Society, vol. 113(484), pages 226-239, January.
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    Cited by:

    1. Zachary Ramona & Mishra Chandra S., 2013. "Research on Angel Investments: The Intersection of Equity Investments and Entrepreneurship," Entrepreneurship Research Journal, De Gruyter, vol. 3(2), pages 160-170, January.
    2. Magnus Henrekson & Mikael Stenkula, 2022. "William J. Baumol: Innovative Contributor to Entrepreneurship Economics," Research in the History of Economic Thought and Methodology, in: Research in the History of Economic Thought and Methodology: Including a Symposium on the Work of William J. Baumol: Heterodox Inspirations and Neocla, volume 40, pages 107-131, Emerald Group Publishing Limited.
    3. Corbetta Guido & Minichilli Alessandro & Salvato Carlo, 2013. "Entrepreneurship Experience: A Complex, Multidimensional Phenomenon within Europe and Worldwide," Entrepreneurship Research Journal, De Gruyter, vol. 3(1), pages 1-8, January.

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