Private and Social Returns to R&D: Drug Development and Demographics
AEA Papers and Proceedings
vol. 111,
May 2021
(pp. 336-40)
Abstract
Investment in intangible capital such as R&D has increased dramatically since the 1990s. However, productivity growth remains sluggish in recent years. One potential reason is that a significant share of the increase in intangible investment is geared toward consumer products such as pharmaceutical drugs with limited spillovers to productivity. We document that a significant share of R&D spending in the United States is done by pharmaceutical firms and geared to developing drugs for older patients. Increased life expectancy and quality of life for the elderly increases welfare but may not be reflected in estimates of total factor productivity.Citation
Benmelech, Efraim, Janice Eberly, Dimitris Papanikolaou, and Joshua Krieger. 2021. "Private and Social Returns to R&D: Drug Development and Demographics." AEA Papers and Proceedings, 111: 336-40. DOI: 10.1257/pandp.20211104Additional Materials
JEL Classification
- I11 Analysis of Health Care Markets
- O32 Management of Technological Innovation and R&D
- L65 Chemicals; Plastics; Rubber; Drugs; Biotechnology
- J11 Demographic Trends, Macroeconomic Effects, and Forecasts
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence