A more inclusive economy makes for a more inventive economy : The Indicator from Planet Money Women and non-white men are gaining ground when it comes to science and engineering degrees, but not when it comes to patents.
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The Inclusion Payoff

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The Inclusion Payoff

The Inclusion Payoff

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

CARDIFF GARCIA, HOST:

Hey, everyone. It's Cardiff. This is THE INDICATOR FROM PLANET MONEY. Today I'm joined by an old friend of the show's, economist Lisa Cook of Michigan State University, because Lisa has just released a study that offers new ideas for how to make the U.S. economy more innovative, more inventive by first making it more inclusive.

Lisa, welcome back to the show.

LISA COOK: So excited to be with you again, Cardiff.

GARCIA: So, Lisa, I want to take a second to set up your paper for our listeners here because it starts with a mystery, with a kind of puzzle. So you discovered that the share of college and graduate degrees in science and engineering that goes to women has been going up through the last few decades, and it hasn't quite caught up to the share that's going to men. It's not 50-50. But still, the share of those degrees that women get has been going up. And, of course, these degrees in science and engineering - those are the degrees that we associate with people who are going to invent new things, new technologies. And yet there has not been similar progress in the share of patents for new inventions that end up going to women. And so you looked at that, and then separately, you also looked at the same trends for African American women and men. And you found the same thing - share of science and engineering degrees going up, share of patents not keeping up. So break down this puzzle for us, please.

COOK: It was remarkable that women and African Americans hadn't caught up to the general population as they had with respect to degrees in science and engineering field. So let me just give you a couple of statistics. So there are 235 patents per million for the period that I was looking at in this paper, and that's for everybody in the patent dataset. But now if we look at just women, it turned out to be about 40 patents per million. And then if we look at it for African Americans, it turns out to be six patents per million. That's a huge gap. So the puzzle was, how did this happen? What is happening with respect to moving from the beginning of the patent process - that's education - to the end of the process to participating in invention, participating on patent teams and then commercializing that invention? So this was the big puzzle that led to this entire research agenda.

GARCIA: Yeah. You found that there seem to be barriers along that path from getting the degrees and the training to then participating on the teams and working in the companies that invent things and get those patents. So I guess the natural follow-up question is, what are those barriers?

COOK: A number of them had to do with workplace climate, and that's still the case. So women and underrepresented minorities are not always invited to participate on patent teams at the same rate that their counterparts are. They might be kept out of the circles of capital, for example, that it might take to start an invention or innovation. But at the commercialization stage, the final stage of innovation where invention is commercialized, this is the one that has the biggest gap.

GARCIA: Yeah, and there's fascinating data in your paper on this that I'd like to share with our listeners. So of all the venture capital investment in startups, only 7% goes to companies that include a woman founder. And less than 1% goes to companies that include an African American woman founder. That's as of 2014. So there are these huge disparities, and it suggests that there is a lot of talent out there that is not being matched to the jobs where that talent could optimally do the best work. And, Lisa, this also deprives the rest of us of the inventions that these excluded groups would be coming up with, right?

COOK: That's right because that means that the innovative frontier is not as far out as it could be, that we're not creating as many inventions as we could if we had an optimal allocation. So let me tell you about one result that I found early in this research. What I found was that single-sex teams, whether they're male or female, were less productive than mixed-gender teams. So just by having more diversity on teams - and I think we can extend this by race and ethnic group - I think that we could have a lot more invention and innovation in our economy if we were more open to different types of people being on those teams.

GARCIA: OK. And so there's another question then, which is, well, how do we do that? How do we make this part of the economy, the innovation economy, more inclusive for these groups that historically have been shut out of it? Lisa, you've got three proposals, and I am going to ask you about those right after a quick break.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

GARCIA: OK, we are back with economist Lisa Cook, who has three ideas for how to make the innovation economy more inclusive and, therefore, more innovative. Lisa, let's look at this first idea, which has to do with improving how we measure who the inventors themselves are because apparently, the data for this just is not very good.

COOK: It's not very good. We don't count who people are. Race is not recorded in the patent data. So unlike for the Small Business Administration, where small businesses provide demographic data on the owners of the businesses, say gender, race, ethnicity, we don't collect those data for patents. And this is important because we need to have a benchmark. There is the IDEA Act that Congress is considering now. It's based on my previous research. And I would urge Congress to support that act and pass it so that we could get an accurate count of who is participating in patenting right now.

GARCIA: OK. And, Lisa, your second idea has to do with reforming the Small Business Administration, the SBA. And if listeners don't know what the SBA is, it's a government agency that helps support entrepreneurs and small businesses through mentoring programs and arranging loans and things like that. So, Lisa, what should the SBA be doing?

COOK: I would say that it could do a better job of recruiting participants, i.e. inventors, to apply for the programs. And this program is meant to promote the commercialization of invention. So in their mentoring programs, for example, they recruit in places where there are tech hubs, for example, let's say in Silicon Valley or along Route 128. Well, a lot of African American inventors are concentrated in Atlanta. And I think that if there were more recruiting there, you'd get better outcomes. For example, the inventor of the Super Soaker, Lonnie Johnson, is based there, and he's been working there for decades. And the same is true for Hispanic inventors. They're not necessarily concentrated where recruiting might take place. So if we can match firms and universities to these individual inventors who are in underrepresented minority groups, we could probably get better outcomes with respect to applicants and successful participants in these programs at the SBA.

GARCIA: OK. And then finally, Lisa, your third idea has to do with workplace climate and the changes that need to be made there. That sounds like a tough one. What is your recommendation for how to make the workplace climate better?

COOK: Cardiff, can we all just get along?

GARCIA: I would love that (laughter).

COOK: Really; I think that is the recommendation here. So we see on social media, especially now following the death of George Floyd, a lot of African American inventors and people working in the tech sector talking about the problems that they have encountered in the sector that make it less likely that they would participate. Well, how do we get rid of those barriers? Well, I don't have all the answers. There are others who have studied this, like the Kapor Center. There are ways that we can see workplace climate issues reduced. We can make sure that there is less sexual harassment, less racial harassment and make sure there is representation at every level of a firm. There should be bystander training. I mean, there is just a lot that we've learned about diversity that seems as though tech firms could embrace, so there's a lot more that can be done to welcome African Americans and women and other races and ethnicities into the innovation economy.

GARCIA: Lisa Cook, what a pleasure it always is to speak with you. Thank you.

COOK: The pleasure's all mine. Thank you, Cardiff.

GARCIA: This episode of THE INDICATOR was produced by Autumn Barnes and fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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