Innovation and social welfare: A new research agenda

Innovation research is motivated by the understanding that new technologies contribute to address societal challenges and foster welfare. Extant research in the economics of innovation has, however, adopted a narrow definition of social welfare, which focuses on economic performance and material well-being, and that mostly disregards distributional impacts of innovation. This paper critically reviews the concept of social welfare in the economics of innovation literature, and it outlines a new research agenda that will investigate the impacts of innovation on individuals' well-being and aggregate social welfare. The new research program has two major pillars. First, it adopts a broader notion of agents' well-being that comprises also non-economic factors and capabilities alongside income and material wealth. Second, it argues that welfare analyses of innovation must explicitly take into account equity and social justice in addition to efficiency and economic performance. This new research agenda opens up several novel questions for future innovation research and policy-making, pointing to the existence of trade-offs and dilemmas between efficiency and equity, and between short- and long-run impacts of innovation on social welfare.