Total factor productivity growth is slowing down, but we have more patents than ever. What gives? Aakash Kalyani argues that if you look at the actual text of the patents, they’re getting less creative — a change likely caused by falling population growth. 1/
Oct 22, 2025 · 4:44 AM UTC
How can you tell creativity? Obviously, we cannot have RAs read all the patents, but we can use simple computational methods. Find all two word combinations, and discard those in common use before 1900. Those are technical bigrams. The less they’ve been used, the more creative.
This is plausibly an improvement over using subsequent patent citations, and tracks with observable data on what goes with a patent being important.
Kalyani applies the Olley-Pakes method of calculating total factor productivity (read De Loecker-Eeckhout-Unger for how that works) and finds that firms with more creative patents also have higher productivity growth, while firms with derivative patents fall off.
This allows us to explain how patents can have surged while we seem to find fewer new ideas. The patents aren’t breakthroughs in the same way. Creativity has fallen.
Kalyani wants an explanation, and thinks he has one in population change. First patents are more creative than later ones. If fewer new people are entering, then perhaps we will get fewer creative new ideas.
I am a bit skeptical of this bit. However, he argues that we can explain much of the decline in creativity from slowing population growth, which intuitively makes sense — fewer people means fewer ideas.
Aakaah Kalyani, “The Creativity Decline” (2025)
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