Fuel Of Interest In Korean Economic

University of Iowa

Iowa Research Online

3eses and Dissertations

Summer 2017

Fuel of interest and re of genius: essays on the

economic history of innovation

Michael Jerey Andrews

University of Iowa

3is dissertation is available at Iowa Research Online: h5p://ir.uiowa.edu/etd/5702

Follow this and additional works at: h5p://ir.uiowa.edu/etd

Part of the Economics Commons

Recommended Citation

Andrews, Michael Je2rey. “Fuel of interest and 4re of genius: essays on the economic history of innovation.” PhD (Doctor of

Philosophy) thesis, University of Iowa, 2017.

h5p://ir.uiowa.edu/etd/5702.

FUEL OF INTEREST AND FIRE OF GENIUS: ESSAYS ON THE ECONOMIC

HISTORY OF INNOVATION

by

Michael Jeffrey Andrews

A thesis submitted in partial fulfillment of the

requirements for the Doctor of Philosophy

degree in Economics

in the Graduate College of

The University of Iowa

August 2017

Thesis Supervisor: Assistant Professor Nicolas Ziebarth

Graduate College

The University of Iowa

Iowa City, Iowa

CERTIFICATE OF APPROVAL

PH.D. THESIS

This is to certify that the Ph.D. thesis of

Michael Jeffrey Andrews

has been approved by the Examining Committee for the

thesis requirement for the Doctor of Philosophy degree

in Economics at the August 2017 graduation.

Thesis Committee:

Nicolas Ziebarth, Thesis Supervisor

Joel Mokyr

Martin Gervais

Alice Schoonbroodt

Julia Garlick

To the anonymous inventors who created our world but whose names have been lost

to history

ii

Before [the establishment of the patent system], any man

might instantly use what another had invented; so that the

inventor had no special advantage from his own invention.

The patent system changed this; secured to the inventor,

for a limited time, the exclusive use of his invention; and

thereby added the fuel of interest to the fire of genius, in

the discovery and production of new and useful things.

Abraham Lincoln,

Lecture on Discoveries and Inventions, 1858

iii

ACKNOWLEDGEMENTS

First and foremost, I want to thank my advisor, Nicolas Ziebarth, for his

guidance, his insight, and, often, his patience. I would also like to thank all of the

members of my committee: Joel Mokyr, who acted as a second advisor to me while I

was visiting Northwestern University; Alice Schoonbroodt; Martin Gervais; and Julia

Garlick. In addition to the members of my committee, I am especially grateful to

Teddy Kim and Michael Choi. I have learned a lot from the entire economics depart-

ment at the University of Iowa, and almost everyone has been extremely generous

with their time. I have learned the most from my fellow graduate students. A list of

all of the students to whom I am indebted would consist of the entire grad student

directory.

I am also very grateful to the Kauffman Foundation, NSF Doctoral Disser-

tation Grant #1661421, the Balzan Foundation, and the Northwestern Center for

Economic History for financial support.

No acknowledgement from a Tippie College of Business dissertation would be

complete without thanking Renea Jay, because no Tippie student would be able to

complete their dissertation without Renea’s constant help and support. When I first

arrived in Iowa, I was told that Renea was “the department mom.” I now realize that,

if anything, such a description understates the work Renea does for her students.

Last and certainly not least, I am eternally grateful to my parents, Jeff and

Adair, for constant support and encouragement.

iv

ABSTRACT

This dissertation, which consists of four chapters, uses historical patent data to

understand invention in the United States. The first chapter studies how institutions

of higher education affect invention. The second chapter seeks to understand the

importance of informal social interactions for the creation of new ideas. The third

chapter answers the question of what types of individuals are most likely to become

inventors. The fourth chapter discusses various historical patent datasets in detail.

In Chapter 1, I exploit historical natural experiments to identify the causal

effect of the establishment of new colleges on local patenting. Using losing finalist

counties that did not receive a new college as counterfactuals, I find that the es-

tablishment of a new college caused 33% more patents per year in college counties

relative to the losing finalists. To understand the role of a college education in driving

patenting in college towns, I use a novel dataset of graduates from college yearbooks

and find that a college’s graduates and faculty account for a very small share of the

patents granted in that college’s county. Changes in county population account for

45-65% of the increase in patenting in college counties.

In Chapter 2, I exploit a different historical policy to understand the impor-

tance of informal social interactions for invention. More specifically, I examine the

effects of state-level alcohol prohibition in the U.S. Prior to the enactment of statewide

alcohol laws, each county determined its own alcohol policies. Thus, statewide prohi-

bition differentially treated counties depending on whether they were wet or dry prior

v

to statewide adoption. The imposition of statewide prohibition reduces the number

of patents by 15% per year in previously wet counties relative to previously dry coun-

ties. The effect is largest in the first three years after the imposition of prohibition

and diminishes thereafter. Consistent with this decrease being driven by a disruption

of informal social interactions, the patenting rate for men decreased more than that

for women in previously wet counties.

In Chapter 3, my coauthors and I match the Annual Reports of the Commis-

sioner of Patents from 1870 to 1940 to the corresponding U.S. Federal Population

Censuses. This matching procedure provides a rich set of demographic information

on a comprehensive set of inventors, allowing us to answer the fundamental ques-

tion of who invents. We first document that patentees are more likely to be older,

white, male and to be living in a state other than the one in which they were born.

These patterns are very persistent over space and time. We then attempt to iden-

tify correlates of the demographics of patentees focusing on county-level economic

and demographic characteristics. Beyond the most obvious, such as the fraction of

a particular demographic group in that county, very little explains differences in the

demographics of inventors across counties.

In Chapter 4, I compare the strengths and weaknesses of four historical patent

datasets and consider the suitability of each for use in economic research. I describe in

detail differences in terms of the type and reliability of included information and po-

tential sample selection issues. I show that while there are differences across datasets,

overall they paint a remarkably consistent picture of invention in U.S. history.

vi

PUBLIC ABSTRACT

Innovation is the key driver of economic growth. Despite its importance, sur-

prisingly little is known about the identities of inventors, how they create new ideas,

or how policy can promote invention. Each chapter of my dissertation uses historical

data to answer these questions.

Chapter 1 studies how colleges promote invention. Commercial innovation

often occurs near colleges, but determining whether colleges cause those innovations

is difficult. Comparing places that get a college to runner-up sites that almost received

the new institution, I find that establishing a college causes one-third more patents

per year. These additional patents do not tend to come from a college’s graduates

or faculty; instead, colleges attract inventive people to the area. Controlling for

population explains up to two-thirds of the increase in invention.

In Chapter 2, I test how important informal social interactions – that is, people

serendipitously bumping into one another – are for invention. I exploit a historical

event in which one avenue of informal interactions is eliminated: alcohol prohibition

in U.S. states. Shuttering saloons reduces patenting by 15%. The effect is strongest

immediately after the imposition of prohibition, before people have time to find other

venues in which to interact.

In Chapter 3, my coauthors and I link the patent record to U.S. censuses from

1870 to 1940. We document that women and African Americans are persistently

underrepresented in the patent data. In Chapter 4, I discuss the accuracy and com-

vii

pleteness of various primary sources of historical patent data used in the preceding

chapters.

viii

TABLE OF CONTENTS

LISTOFTABLES…………………………… xii

LISTOFFIGURES ………………………….. xv

PREFACE ………………………………. xxii

CHAPTER

1 THE ROLE OF UNIVERSITIES IN LOCAL INVENTION: EVIDENCE

FROM THE ESTABLISHMENT OF U.S. COLLEGES . . . . . . . . 1

1.1 Introduction ……………………….. 1

1.2 Data and Empirical Model . . . . . . . . . . . . . . . . . . . . . 8

1.2.1 The College Site Selection Experiments . . . . . . . . . . 8

1.2.2 Patent and County Data . . . . . . . . . . . . . . . . . . 14

1.2.3 The Winning and Losing Counties . . . . . . . . . . . . . 17

1.2.4 Empirical Model . . . . . . . . . . . . . . . . . . . . . . . 22

1.3 Results ………………………….. 24

1.3.1 Baseline Results . . . . . . . . . . . . . . . . . . . . . . . 24

1.3.2 Dynamics……………………… 37

1.3.3 Geographic Spillovers . . . . . . . . . . . . . . . . . . . . 40

1.4 How Do Colleges Affect Patenting? . . . . . . . . . . . . . . . . . 43

1.4.1 Patenting by College Graduates and Faculty . . . . . . . 44

1.4.2 College Types and Patent Classes . . . . . . . . . . . . . 51

1.4.3 Patenting by Individuals Unaffiliated with a College . . . 59

1.4.4 Demographic and Economic Effects of Colleges . . . . . . 63

1.4.5 Colleges versus Consolation Prizes . . . . . . . . . . . . . 73

1.4.6 Discussion …………………….. 75

1.5 Conclusion ………………………… 79

2 BAR TALK: INFORMAL SOCIAL INTERACTIONS, ALCOHOL PRO-

HIBITION, AND INVENTION . . . . . . . . . . . . . . . . . . . . . 81

2.1 Introduction ……………………….. 81

2.2 Historical Background . . . . . . . . . . . . . . . . . . . . . . . . 87

2.3 Data …………………………… 97

2.4 Results ………………………….. 103

2.5 Nationwide Prohibition . . . . . . . . . . . . . . . . . . . . . . . 114

2.6 ClosingTime……………………….. 119

ix

3 HISTORICAL CHANGES IN THE DEMOGRAPHICS OF INVEN-

TORS IN THE UNITED STATES . . . . . . . . . . . . . . . . . . . . 120

3.1 Introduction ……………………….. 120

3.2 Data …………………………… 127

3.2.1 Generating a List of Patentee Grantees . . . . . . . . . . 128

3.2.2 Matching Patentees to the Census . . . . . . . . . . . . . 132

3.3 Results ………………………….. 149

3.3.1 Trends in the Demographics of Patentees . . . . . . . . . 149

3.3.2 Trends in the Demographics of Patentees Inferred from

FirstNames ……………………. 156

3.4 County-level Economic and Demographic Correlates . . . . . . . 163

3.5 Effects of Local Institutions on Marginalized Populations . . . . 169

3.5.1 HBCUs………………………. 169

3.5.2 Women’s Suffrage . . . . . . . . . . . . . . . . . . . . . . 174

3.6 Conclusion ………………………… 176

4 COMPARING HISTORICAL PATENT DATASETS . . . . . . . . . . 178

4.1 Introduction ……………………….. 178