Working Paper: NBER ID: w24110
Authors: Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
Abstract: In this paper we merge three datasets - individual income data, patenting data, and IQ data - to analyze the determinants of an individual's probability of inventing. We find that: (i) parental income matters even after controlling for other background variables and for IQ, yet the estimated impact of parental income is greatly diminished once parental education and the individual's IQ are controlled for; (ii) IQ has both a direct effect on the probability of inventing an indirect impact through education. The effect of IQ is larger for inventors than for medical doctors or lawyers. The impact of IQ is robust to controlling for unobserved family characteristics by focusing on potential inventors with brothers close in age. We also provide evidence on the importance of social family interactions, by looking at biological versus non-biological parents. Finally, we find a positive and significant interaction effect between IQ and father income, which suggests a misallocation of talents to innovation.
Keywords: inventors; innovation; parental income; IQ; misallocation of talents
JEL Codes: I24; J18; J24; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental Income (D31) | Probability of becoming an inventor (O31) |
| Parental Education (I24) | Probability of becoming an inventor (O31) |
| Individual IQ (L15) | Probability of becoming an inventor (O31) |
| Parental Divorce (J12) | Probability of becoming an inventor (O31) |
| Individual IQ and Father Income Interaction (I24) | Probability of becoming an inventor (O31) |