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Much more interesting is the percentage of the value they generate that is captured by entrepreneurs: "We conclude that only a minuscule fraction of the social

Much more interesting is the percentage of the value they generate that is captured by entrepreneurs: "We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers." http://www.nber.org/papers/w10433 http://www.nber.org/papers/w10433

BenjaminTodd 11y ago
Yes - I'd guess entrepreneurs have more social impact than salaried workers, because they do more innovative work. We'll write more about this in the future. Note that the paper you cite is only about technological advances though, and only a fraction of what entrepreneurs do contributes to technological advances - a bunch of its just implementing stuff that's already best practice.
- stevetrewick 11y ago
  AIUI implementing stuff that's already best practice - innovation driven Total Factor Productivity growth - is technological advance and is included in Nordhaus' calculations. But IANAE.
  - BenjaminTodd 11y ago
    Good point. It still seems unlikely to me that all entrepreneurial activity contributes to productivity growth though. I'll look into it some more.
hobbyjogger 11y ago
Sort of. An example mentioned in the paper is etoys.com, presumably the first major online toy retailer. According to this theory, etoys.com would have only captured some small % of the online market for online toys before they went under. So, yes, it's true that the "producer" here didn't capture much of the value of that market. But it's equally true that other entrepreneurs (most notable among them Amazon) captured a huge chunk of that market because etoys.com's "technological advance" simply wasn't all that technically difficult (or advanced) and wasn't different from what plenty of other entrepreneurs were doing in other online markets. So the outcome seems entirely logical and fair. Sure, etoys.com launched the first toy site but didn't capture much of the "value" of selling toys online. But etoys.com wasn't very good and it got beat out by similar but better sites. Would you rather strengthen our (already fundamentally overbearing) IP laws so that no one else could compete in selling toys online? That's the only way I can imagine to ensure that etoys.com could take much more of the profits and not get out-margined by Amazon and the like.

BenjaminTodd 11y ago

Yes - I'd guess entrepreneurs have more social impact than salaried workers, because they do more innovative work. We'll write more about this in the future. Note that the paper you cite is only about technological advances though, and only a fraction of what entrepreneurs do contributes to technological advances - a bunch of its just implementing stuff that's already best practice.

stevetrewick 11y ago
AIUI implementing stuff that's already best practice - innovation driven Total Factor Productivity growth - is technological advance and is included in Nordhaus' calculations. But IANAE.
- BenjaminTodd 11y ago
  Good point. It still seems unlikely to me that all entrepreneurial activity contributes to productivity growth though. I'll look into it some more.

hobbyjogger 11y ago

Sort of. An example mentioned in the paper is etoys.com, presumably the first major online toy retailer. According to this theory, etoys.com would have only captured some small % of the online market for online toys before they went under. So, yes, it's true that the "producer" here didn't capture much of the value of that market. But it's equally true that other entrepreneurs (most notable among them Amazon) captured a huge chunk of that market because etoys.com's "technological advance" simply wasn't all that technically difficult (or advanced) and wasn't different from what plenty of other entrepreneurs were doing in other online markets. So the outcome seems entirely logical and fair. Sure, etoys.com launched the first toy site but didn't capture much of the "value" of selling toys online. But etoys.com wasn't very good and it got beat out by similar but better sites. Would you rather strengthen our (already fundamentally overbearing) IP laws so that no one else could compete in selling toys online? That's the only way I can imagine to ensure that etoys.com could take much more of the profits and not get out-margined by Amazon and the like.