Productivity

Technology Is Lifting Living Standards

New technologies and new applications for existing technologies will continue raising living standards in the United States over the next quarter century, say the authors of a new NCPA report. And the pace of technological change will accelerate over the next quarter century.

  • By one estimate, more than half the store of human knowledge has been produced over the past 50 years.

  • Four of the top 10 inventions and discoveries -- the computer, the microprocessor, DNA and the Internet -- were made in the past 50 years or so.

  • In the U.S., the number of scientists and engineers working in research and development has doubled since the early 1970s; more than half of U.S. patents have been issued in the past 40 years; and the number of new products put on the market annually has tripled since 1980.

With so much research and development occurring, companies are likely to keep offering innovative goods and services at a furious pace. And the rate of diffusion of these products in the market is increasing. For example, the time it takes for a quarter of the population to adopt the use of a product is decreasing. (see figure)

  • It took 55 years to get the automobile to a quarter of the U.S. population; whereas the telephone required 35 years; and the television, 26.

  • More recently a quarter of U.S. households owned a personal computer within 16 years of its introduction.

  • And for the cellular telephone, the time shrank to 13 years.

Commercial applications for the Internet are coming even faster than the personal computer or the cell phone.

The economic effects of technology are overlooked, say the authors, and growth is understated to an increasing extent, because traditional economic measures are unable to keep pace with the introduction of new goods and services and are best at measuring physical goods, rather than intangibles.

Source: W. Michael Cox (NCPA senior fellow) and Richard Alm (Dallas Morning News), "Technology and Economic Growth in the Information Age," Policy Backgrounder No. 147, March 12, 1998, National Center for Policy Analysis, 12770 Coit Rd., Suite 800, Dallas, Texas 75251, (972) 386-6272.

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