Nber Working Paper Series New Ideas in Invention

A key decision in research is whether to try out new ideas or build on more established ideas. In this paper, we evaluate which type of work is more likely to spur further invention. When recent advances create superior opportunities for invention, their adoption as research inputs in the invention process promotes technological progress. The gains from pursuing such innovative research paths may, however, be very limited as new ideas are often initially raw and poorly understood. We determine idea inputs in invention based on the text of nearly every US patent granted during 1836–2010. We find that inventions that build on new ideas early are more likely to spur subsequent invention than inventions that rely on ideas of older vintage. Our results are important because they suggest a benefit from encouraging and supporting innovative research that tries out new ideas — avoiding stagnation in technological advance. Mikko Packalen University of Waterloo Department of Economics 200 University Avenue West Waterloo, ON N2L 3G1 Canada [email protected] Jay Bhattacharya 117 Encina Commons CHP/PCOR Stanford University Stanford, CA 94305-6019 and NBER [email protected]