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A Calculation of the Social Returns to Innovation

Author

Listed:
  • Benjamin F. Jones
  • Lawrence H. Summers

Abstract

This paper estimates the social returns to investments in innovation. The disparate spillovers associated with innovation, including imitation, business stealing, and intertemporal spillovers, have made calculations of the social returns difficult. Here we provide an economy-wide calculation that nets out the many spillover margins. We further assess the role of capital investment, diffusion delays, learning-by-doing, productivity mismeasurement, health outcomes, and international spillovers in assessing the average social returns. Overall, our estimates suggest that the social returns are very large. Even under conservative assumptions, innovation efforts produce social benefits that are many multiples of the investment costs.

Suggested Citation

  • Benjamin F. Jones & Lawrence H. Summers, 2020. "A Calculation of the Social Returns to Innovation," NBER Working Papers 27863, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27863
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    Cited by:

    1. Thomas H.W. Ziesemer, 2024. "Internal rates of return for public R&D from VECM estimates for 17 OECD Countries," Economic Change and Restructuring, Springer, vol. 57(5), pages 1-16, October.
    2. Yaqub, Ohid & Coburn, Josie & Moore, Duncan A.Q., 2023. "Knowledge spillovers from HIV research-funding," SocArXiv gcuhn, Center for Open Science.
    3. Christos A Makridis & Andrew A Borkowski & Gil Alterovitz, 2024. "Perspectives on advancing innovation and human flourishing through a network of AI institutes," Science and Public Policy, Oxford University Press, vol. 51(3), pages 557-562.
    4. Li, Meiling & Wang, Yang & Du, Haifeng & Bai, Aruhan, 2024. "Motivating innovation: The impact of prestigious talent funding on junior scientists," Research Policy, Elsevier, vol. 53(9).
    5. Canton, Erik, 2025. "A portfolio approach to research funding," Research Policy, Elsevier, vol. 54(1).
    6. Obschonka, Martin & Tavassoli, Sam & Rentfrow, P. Jason & Potter, Jeff & Gosling, Samuel D., 2023. "Innovation and inter-city knowledge spillovers: Social, geographical, and technological connectedness and psychological openness," Research Policy, Elsevier, vol. 52(8).
    7. Schubert, Torben & Darold, Denilton & Will, Markus, 2024. "Measuring the Causal Economic Effects of Scientific Research — Evidence from the Staggered Foundation of the SENAI Innovation Institutes in Brazil," Papers in Innovation Studies 2024/14, Lund University, CIRCLE - Centre for Innovation Research.
    8. John Van Reenen, 2022. "Innovation and Human Capital Policy," NBER Chapters, in: Innovation and Public Policy, pages 61-83, National Bureau of Economic Research, Inc.
    9. Lin, Yiling & Evans, James A. & Wu, Lingfei, 2022. "New directions in science emerge from disconnection and discord," Journal of Informetrics, Elsevier, vol. 16(1).
    10. Diane Coyle & Kieran Lind & David Nguyen & Manuel Tong, 2022. "Are digital-using UK firms more productive?," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-06, Economic Statistics Centre of Excellence (ESCoE).
    11. Auboin, Marc & Koopman, Robert & Xu, Ankai, 2021. "Trade and innovation policies: Coexistence and spillovers," Journal of Policy Modeling, Elsevier, vol. 43(4), pages 844-872.
    12. Lisa Keding & Marten C. Ritterrath, 2025. "Inventors' Personal Experience of Natural Disasters and Green Innovation," ECONtribute Discussion Papers Series 380, University of Bonn and University of Cologne, Germany.
    13. Bracht, Felix & Verhoeven, Dennis, 2025. "Air pollution and innovation," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    14. Thibault Schrepel, 2024. "A systematic content analysis of innovation in European competition law," European Journal of Law and Economics, Springer, vol. 58(2), pages 355-395, October.
    15. Diane Coyle & Wendy Li, 2021. "The Data Economy: Market Size and Global Trade," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2021-09, Economic Statistics Centre of Excellence (ESCoE).
    16. Andreas Teichgraeber & John Van Reenen, 2022. "A policy toolkit to increase research and innovation in the European Union," POID Working Papers 025, Centre for Economic Performance, LSE.
    17. Schubert, Torben & Darold, Denilton & Will, Markus, 2024. "Measuring the causal economic effects of scientific research: Evidence from the staggered foundation of the SENAI Innovation Institutes in Brazil," Discussion Papers "Innovation Systems and Policy Analysis" 87, Fraunhofer Institute for Systems and Innovation Research (ISI).
    18. Alston, Julian M. & Pardey, Philip G., 2022. "Are Ideas Really Getting Harder to Find?," Staff Papers 320517, University of Minnesota, Department of Applied Economics.
    19. Truger, Achim, 2022. "Außergewöhnliche Notsituation und Sondervermögen "Transformationsfonds Saarland" ökonomisch plausibel," ifso expertise 23, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    20. Schubert, Torben & Darold, Denilton & Will, Markus, 2025. "Measuring the causal economic effects of scientific research—Evidence from the staggered foundation of the SENAI innovation institutes in Brazil," Socio-Economic Planning Sciences, Elsevier, vol. 101(C).
    21. Katherine Wynn & Mingji Liu & Jasmine Cohen, 2022. "Quantifying the economy‐wide returns to innovation for Australia," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 591-614, September.
    22. Edeh, Jude & Prévot, Frédéric, 2024. "Beyond funding: The moderating role of firms' R&D human capital on government support and venture capital for regional innovation in China," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    23. Andreas Lichter & Max Löffler & Ingo E. Isphording & Thu-Van Nguyen & Felix Poege & Sebastian Siegloch, 2025. "Profit Taxation, R&D Spending, and Innovation," American Economic Journal: Economic Policy, American Economic Association, vol. 17(1), pages 432-463, February.
    24. Luyi Han & Zheng Tian & Timothy R Wojan & Stephan J Goetz, 2024. "Testing biasedness of self-reported microbusiness innovation in the annual business survey," PLOS ONE, Public Library of Science, vol. 19(1), pages 1-19, January.
    25. Andreas Lichtenberger & Joao Paulo Braga & Willi Semmler, 2022. "Green Bonds for the Transition to a Low-Carbon Economy," Econometrics, MDPI, vol. 10(1), pages 1-31, March.

    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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