Working Paper: NBER ID: w26305
Authors: Alberto Galasso; Hong Luo
Abstract: We study the impact of consumers’ risk perception on firm innovation. Our analysis exploits a major surge in the perceived risk of radiation diagnostic devices, following extensive media coverage of a set of over-radiation accidents involving CT scanners in late 2009. Difference-in-differences regressions using data on patents and FDA product clearances show that the increased perception of radiation risk spurred the development of new technologies that mitigated such risk and led to a greater number of new products. We provide qualitative evidence and describe patterns of equipment usage and upgrade that are consistent with this mechanism. Our analysis suggests that changes in risk perception can be an important driver of innovation and can shape the direction of technological progress.
Keywords: risk perception; firm innovation; radiation diagnostic devices; patenting; FDA product clearances
JEL Codes: K13; O30; O31; O32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Overradiation shock (L94) | Increase in patenting of risk-mitigating technologies (RMTs) (O38) |
| Overradiation shock (L94) | Increase in FDA applications for new products in radiation diagnostic devices (L65) |
| Overradiation shock (L94) | Decline in the use of high-radiation diagnostic procedures (I19) |
| Overradiation shock (L94) | Increased propensity to upgrade CT systems (L63) |
| Increase in risk perception (D81) | Greater willingness to pay for safety (D11) |
| Increase in risk perception (D81) | Significant innovation responses (O35) |