Collaborative Research: The Economics of Creativity

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

Productivity follows a hump shape over the lifecycle. Economists have developed models of lifecycle human capital accumulation to explain this pattern the incentive to invest in human capital is greatest at young ages when the remaining career is longest. Psychologists have noted the same lifecycle pattern but have attributed it to lifecycle variations in the ability to assimilate and produce new ideas. According to this view, at first exposure to a field, individuals' thought patterns are highly flexible, but as exposure (measured by experience in an area) accumulates, existing thought patterns become reinforced making it increasingly difficulty to think in different ways. Thus, if economists attribute lifecycle variations in productivity to changes in the incentives to acquire new skills, psychologists have emphasized variations in the ability to assimilate new concepts. Building on our previous work, a pilot analysis shows that across a range of fields, creators whose work evolved through experimentation, do their most important work at older ages, but that those whose contributions were conceptual, did theirs while quite young. While the late peaks are consistent with the human capital model, it is impossible to reconcile a peak at the beginning of the career with the human capital model. For someone in their 20s or 30s, the finiteness of the career has a trivial effect on the incentive to invest in new skills. Nor does the human capital model provide a natural explanation for the striking differences between these groups. This proposal presents a new model of lifecycle productivity that draws on a declining ability to change thought patterns. According to this model, theorists' most important contributions are most common at the beginning of their careers because their work is based on quick re-conceptualizations, which are most likely before existing thought patterns have become reinforced. Empirical work (of equal importance) derives from the gradual accumulation of a body of knowledge, so the ability to re-conceptualize issues continually is less important. We will test these predictions using data collected under funding on a range of disciplines, including the sciences, arts, and business. With the increase in educational attainment and the greater reliance of science in production, the ability to innovate is becoming an increasingly important determinant of earnings relative to human capital, making this analysis timely. The ability to adapt to change affects the response to changes in work brought on by technological change. The model implies that the adoption of new technologies that require re-conceptualizations of work will be greatest among young workers, but that old workers will heavily adopt new technologies that draw on existing knowledge. A decline over the lifecycle in the ability to adapt to change represents a new form of vintage human capital effect, which we will test against traditional vintage effects using data on computer adoption. The proposed model also provides new explanations for gender differences in the occupation structure and for the occupational mobility of older workers.