The diminishing returns of research
"Innovation" has become a political/economic panacea over the past few years. But an interesting paper suggests that research also obeys the laws of diminishing returns. Research productivity in the United States has declined spectacularly in the last few decades.
A good example is Moore’s Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 18 times larger than the number required in the early 1970s.
The paper is mainly aimed at updating endogenous growth models, which assume that research exhibits constant returns. But the examples given – declining research productivity in technology, medicine and the economy as a whole, have huge implications for those thinking we can just chuck a bunch of researchers onto the problem of stagnating growth.
We find that research productivity for the aggregate U.S. economy has declined by a factor of 41 since the 1930s, an average decrease of more than 5% per year
Averaging across all our samples, research productivity falls at a rate of about 9% per year, cumulating to a 2.5-fold decline every decade. At this rate, research productivity declines by a factor of about 15 over three decades of changes; put differently, it requires 15 times more researchers today than it did 30 years ago to produce the same…
We don’t just need to chuck more brains at this problem. We need to use our brains to deploy those brains.