Media Contact:
Elizabeth Steinberg, 816-932-1136, esteinberg@kauffman.org, Kauffman Foundation
(KANSAS CITY, Mo.) April 12, 2012 —The Rate and Direction of Inventive Activity Revisited is a new volume being released on the 50th anniversary of the original book. With funding from the Ewing Marion Kauffman Foundation, it is one of the National Bureau of Economic Research’s (NBER) newest releases and is edited by Josh Lerner and Scott Stern, and published by the University of Chicago Press. The original landmark publication, The Rate and Direction of Inventive Activity: Economic and Social Factors (edited by Richard Nelson) was released in 1962.
"This edited volume revisits the findings of NBER’s classic book and offers new theoretical and empirical contributions to fundamental questions relating to the economics of innovation and technological change," says Robert Strom, director of research and policy at the Kauffman Foundation.
A central insight of the 1962 volume was the identification of a significant gap between the private and social returns to innovation, with the implication that a market-based economy will tend to under-invest in innovation.
Both volumes include contributions by author Kenneth Arrow. His 1962 essay lays out the implications of the conflict between the low social cost of using knowledge and the high cost of producing it. The 2012 essay highlights the idea that the economics of innovation must confront and incorporate some of the unusual properties of the development of new ideas in areas ranging from medicine to Wikipedia.
The implications for firms seeking to appropriate returns and for social welfare are substantial, wrote Arrow. This new volume suggests that the problem of under-investing in innovation is more pervasive, more subtle and more pernicious than is usually understood.
A number of other pressing issues are addressed throughout the book, including:
- The role of "open" research environments (from scientific communities to the open-source software movement) in innovation.
- The economic and institutional drivers of open-access versus proprietary innovation models, and the impact of institutional design on innovation outcomes.
- The impact of innovation and diffusion on economic growth.
- The role of technical change in moderated or exacerbating macroeconomic fluctuations.
- The relationship between innovation and economic inequality, both within and across countries.
- The role of innovation – as a driver or a remedy – in the current economic crisis.
"The rigorous insights and analysis contained in The Rate and Direction of Inventive Activity Revisited ensure that the book will be a valuable contribution to the study of the economics of innovation and entrepreneurship." says Strom.
Learn more, or order the book at The University of Chicago Press 
