Household Innovation: Its Nature, Measurement, Applications, and Outlook

Abstract

Household innovation is the development of functionally novel products, processes, or applications by consumers, in their discretionary time without payment. Household innovation is widely observed in practice, but not yet in official statistics. We discuss the nature of household innovation and how it differs from innovation in the business sector. Next, we present a survey method to find nation-wide estimates, and give examples of policy and practitioner insights obtained from household surveys done to date.
Household innovation is driven by individuals’ motives of self-rewards such as personal use, rather than expectations of profit. The types of innovations developed in households complement innovations developed by commercial producers, and they generally pioneer with novel functions. We end with emerging topics in household innovation measurement, including behavioral innovations and the application of web-scraping methods to collect indicators.

Keywords: Household innovation; diffusion failure; user innovation; free innovation; producer innovation; innovation everywhere

JEL Classification: O10, O38, O39