A Calculation of the Social Returns to Innovation

55 Pages Posted: 28 Sep 2020 Last revised: 18 Nov 2021

See all articles by Benjamin F. Jones

Benjamin F. Jones

Northwestern University; National Bureau of Economic Research (NBER)

Larry Summers

Harvard University

Date Written: September 2020


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.

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Suggested Citation

Jones, Benjamin F. and Summers, Larry, A Calculation of the Social Returns to Innovation (September 2020). Available at SSRN: https://ssrn.com/abstract=3700691 or http://dx.doi.org/10.2139/ssrn.3700691

Benjamin F. Jones (Contact Author)

Northwestern University ( email )

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National Bureau of Economic Research (NBER)

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Larry Summers

Harvard University ( email )

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