Through their private and social returns, innovations create a ripple of benefits that extend beyond businesses to society.
- Which large multinational corporation employed the people who created Post-it Notes?
- Referring to the glue he accidentally developed, what did the Post-in inventor mean when he said, his adhesive was “a solution waiting for a problem to solve.”
- How did a church songbook lead to the Post-it note?
- Using the map at the end of the econlife post, identify cities that are the homes of innovation clusters for semiconductors, biology and chemistry, and computer science.
The Economic Idea: Private and Social Return
Innovations can have a large impact through their private and social returns. Examples can include a canal, a ventilated pizza box, and Post-it Notes. Each creates a private and a social return.
A private return goes to the initial producers. While it primarily includes the profits that the developers receive, we could say it also extends to non-money benefits like prestige and similar inventions. For a canal, the builders got the toll money and moved onward to building better waterways. With a new pizza box, the sales would provide the private return.
From there though we have a social return. A social return can lead to a long list of benefits beyond the original inventor. It relates to individuals, to businesses, and to governments. With a canal, there is the transportation of people and goods that could extend across a country. For a ventilated pizza box, it’s the crunchy pizza crust that elevates enjoyment.
As for Post-it Notes, the private and social returns have been massive. That private return relates to the 50 billion Post-its annually sold by 3M. Then, all of those notes help each of us remember something.
So, whether thinking of a canal, a pizza box, or a Post-it Note, we can assume that there is a private and a social return.
Activity Goal: To consider the social return of innovations.
Procedure: A pass around exercise.
- On a small piece of paper, note a new good or service that society needs.
- Pass the paper to a person on your right.
- The recipient of the paper should note a potential social return that an individual, a business, or a government enjoys. It could relate to jobs, the environment, income, the quality of life, or some other benefits.
- Then, again, pass the paper to someone else. On the same paper, note a second social return.
- As a class, share these examples of the social return that innovations generate.
- Use social return examples to explain how they can boost economic activity.