Asked to identify the most influential inventions, we might name the telephone or the light bulb. Then taking the next step, we need to consider what we mean by influential.
In a recent paper, researchers told us what influential means to them. And then, using a data base of millions of patents, they wound up with some surprises.
Defining influential from 1840 to 2010 took the paper’s authors before and after the innovation. They cared about whether the invention was substantially different from all that preceded it and if it became a springboard for all that came next.
The result was three innovation waves. Concentrating on electricity and transportation, the first wave unfolded during the late 19th century. Then, 40 years later, a second wave was characterized by chemicals and electricity. And, after that, as we might expect, computers and communication propelled the third wave:
The researchers’ most surprising conclusion was that influential innovation peaked during the Great Depression. For that reason, it is likely that innovation during an economic slump fueled the growth that followed during the next several decades.
As you might expect, the telephone and airplane are in the list of the 25 most influential inventions. But so too is Jeff Bezos’s one-click. Below, I’ve copied the top 10:
Our Bottom Line: Total Factor Productivity (TFP)
Whether looking at the first telephone or “one-click,” at Nicholas Tesla’s electromagnetic motor or DuPont’s nylon fiber, the impact is the same. As with all influential innovations, output increased because of one, two, or all of the three factors of production. The key though is the result. Total factor productivity (TFP) is all about getting more output from your land, labor, and capital inputs:
But let’s not stop here.
Taking another step into economic territory, we can echo the work of Edwin Mansfield (1930-1997), a University of Pennsylvania economist. Based on his research, he said that a seemingly small innovation can have a large impact through its private and social return. While he was referring to manufacturing inputs like thread, he could easily have been talking about influential innovations. Their private return, as profit, could have initially gone to a business or individual creator. But then, a second phenomenon kicks in. Rippling across millions of individuals, a social return creates the positive externalities that bring benefits to countless individuals.
And from there, we get our economic growth.