Throughout 2015, Alex Bell et al. have been presenting their new working-paper, ‘The Lifecycle of Inventors.’ I’ve seen Chetty present it at the NBER Summer Institute, and it’s on the program for AEA 2016. I can’t find a version anywhere yet, but you can see a very small part of their results in this talk by Chetty, around 49:50. I think this paper will be huge.
Why is this paper so important? It shows, for the first time (and fairly convincingly), just how much familial wealth matters in patenting rates. Or, to put it another way: that having super rich parents matters if you want to be an inventor. Their key turn of phrase, which will make headlines, is “Missing Einsteins.” There appear to be a large number of really, really smart kids who are just getting left in the dust by equally smart kids with far richer parents.
This has huge implications for policy. Before, we might have consoled ourselves with the story that, OK the American Dream doesn’t work for everyone, but at least no one’s holding back the really smart kids, no matter their background! And maybe no one is actively holding them back… but they sure as hell aren’t getting the help that rich kids are getting, and it’s showing up 20-30 years down the line. And it’s showing up in all of the inventions we could have had, but don’t.
Now the story here is wide open, and that’s important to remember before we dive into policy prescriptions. Bell et al. give some reason to think about early childhood exposure to science/tinkering, but we should also be considering primary/secondary education quality stories, access to college and graduate programs, and network effects via the parents. I’m sure there are others. The main point holds, however: for whatever reason, super smart kids from poorer families just don’t go on to invent stuff. That matters for them as individuals, and that matters for all of us, for social welfare.
Peter Thiel laments the lack of jetpacks; maybe it’s because we’re missing Einsteins.