Study shows income-disparity in early-life is strongly correlated to later-life fulfilment of innovation potential

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Published: December 27, 2017 4:23:57 AM

Study shows income-disparity in early-life is strongly correlated to later-life fulfilment of innovation potential

economic growth, Innovation, income disparity, below median income, US, American institutions, tax cut, by socioeconomic classChildren whose parents were in the top 1% of the income distribution in the country were 10 times more likely to become inventors than children whose parents had a below-median income. (IE)

Innovation drives economic growth. It is a truism, sure, but it hasn’t held as potently as it does now. Thus, countries have been pursuing policies directed at unlocking their innovation potential, including tax-cuts for R&D expenses, securing intellectual property rights, etc. And yet, no one will argue that countries are realising their full innovation potential. While there could be many factors hobbling innovation, findings of a recent study by Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, and John Van Reenen—who are asscoiated with various American institutions and, in the case of Jaravel, with and English one—throw up a host of interesting takes on this and also one whether current policy measures are indeed the right ones to spur innovation. Bell et al studied the lives of more than 1 million inventors in the US and found that large disparities in innovation rates exist, influenced by socioeconomic class, race and gender.

Children whose parents were in the top 1% of the income distribution in the country were 10 times more likely to become inventors than children whose parents had a below-median income. Similar gaps emerged for race and gender, both of which have strong correlations with household/individual income and education levels. Similarly, the study points out that children who grow up in areas that have a high inventor population—leading to early-life exposure to innovation—are much more likely to become inventors themselves. The market rewarded those whose inventions had the greatest scientific/technological impact the most. Amongst these star-inventors (earning over $1 million), too, the trends that were noticed for the overall group of inventors held true—there were very few women and very few who came from low-income or non-white families. Tax-cuts and other incentives are likely to make very little difference to star inventors. However, if the same economic incentives were to be redirected towards erasing early-life economic disparities between the lives of high-scoring children, there would be many more star inventors.

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