Economists worry that age reduces innovation. Certainly, this is the stereotype. Without technological innovation, ageing societies cannot improve productivity. Without that improvement it is difficult to maintain citizens’ quality of life. ( see Newsletter #198). Data suggests that the R&D contribution to productivity gains is falling. Today it is down to only 30% of what it was at the start of the 20th century. There are different ways of thinking about innovation.

Winning Nobel Prizes.

Economists have looked for different data to try to study the impact of age on innovation. The Nobel prizes are one place. The biographies of all winners are published (nobelprize.org). It is possible to identify the years in which the winners did the work for which the award is given. (Many awards come years later).The average age at which these key innovations are being made is increasing.

Overall 42% of all winning innovations were made when individuals were in their 30’s. Another 30% came to individuals in their 40’s and 14% in their fifties. No one won the prize for work done before the age of 19. Only 7% did it before the age of 26 and one of them was Einstein! The mean age increased by 8 years over the 20th century. The peak age was 30 in 1900 and nearly 40 by the end of the century. Two or three years of that increase came simply from the ageing of the population. The rest from innovation coming later. The worry is that the increasing age is not on the scale of the improvements in healthy lifespan. Innovation is not keeping up.

The researchers extended their data using almanacs of technological developments. They included hundreds of innovators. Leo Baekerland who invented Bakelite, the first commercial plastic. Frank Whittle who invented the jet engine and even Steve Wozniak. The results were the same and they showed the same depressing pattern. The average age was increasing because there is declining innovation productivity amongst the young. There was no corresponding increase in older productivity. Innovative individuals have less time to be innovative. Their output goes down. The reason is simple. The scientific disciplines have grown. The amount of education needed before "innovation" has increased. The increasing age at which people graduate with a PhD explains the bulk of the difference.

Alternative Views

If a technological innovation is to improve productivity it must be used. In today’s world that tends to mean commercialization at some point. It is a long way from the invention of the transistors to today’s smart phones. Three researchers discovered the transistor in 1947 in the Bell Labs. They received the Nobel Prize in physics in 1956.(John Bardeen who shared that prize won another Nobel Prize in 1972).

In commercialisation the power of older people is more clear. Older entrepreneurs are more successful than their younger counterparts. Many Silicon Valley youthful success stories are the exceptions rather than the rules. Data from thousands of start-up companies shows the same pattern. The more successful companies were started by older entrepreneurs. A sample of the 1700 fastest growing companies showed a founder with an average age of 45.

Age brings with it more financial and social capital. It often brings with it a deep understanding of a particular industry sector. Older adults are better at certain useful types of problem solving. Those that require the integration of multiple sources of information. Combined with the ability to see patterns and connections within complex systems. Experience and thinking can increase the chances for older entrepreneur success. They start more successful businesses. Perhaps it was no accident that Ray Kroc bought the rights to McDonalds when he was 52. Col Saunders founded Kentucky Fried Chicken at 62.

These are not as profound innovations as the Theory of Relativity, but do they count? Not all innovations are of the scale of quantum computing or artificial intelligence. They cannot all represent discontinuous change. Some innovation is about bringing something new to the market. It may not be that radical, but it does offer new benefits. Other innovations can be “efficiency” driven. Providing the same product or service at a cheaper cost to produce. Older entrepreneurs do bring novel propositions to the market.

A Global Opportunity.

What pattern would we expect in the countries to which Nobel Prizes are presented? Perhaps in line with the underlying intellectual potential? Probably in line with population. Two thirds of all Nobel Prizes have gone to researchers working in the USA. Over the century of the awards the USA represented only 5% of the global population. There are, in the world today, many countries with young populations. Africa and India have produced prize winners. They are outnumbered 100-fold by those born in Western Europe and the USA. They can be our future innovators given the right opportunity. Thirty percent of the American Nobel Prize winners were foreign born afterall.