Why America is a country of "lost Einsteins"

The American Dream holds that anyone, regardless of background or birth advantage, can succeed if they only work hard enough. Yet for the country's "lost Einsteins," that dream may be more of a myth than a reality.

New research from Stanford University economist Raj Chetty suggests the U.S. country may be losing out on generations of innovators due to rising inequality and what amounts to a collective failure to identify and nurture their talents. His findings are particularly troubling for a country that's thrived on innovation, ranging from Thomas Edison's lightbulb to Steve Jobs' iPhone, and raises the question of what types of advancements the U.S. has missed out on because of these gaps.

Chetty describes these "lost Einsteins" as children who, while demonstrating significant mathematical abilities, are born female, poor or to families of color -- all of which weigh against their opportunities to let their creative talents bloom as inventors.

The research raises questions about how to address inequality at a time when Congress is closing in on a tax overhaul that critics say advantages wealthier Americans and corporations

"There are many 'lost Einsteins' – individuals who do not pursue a career in innovation even though they would have had highly impactful innovations had they done so," Chetty and his co-authors write in the paper. "If the social planner's goal is to increase innovation, the key question is what types of policy changes can bring these lost Einsteins into the innovation pipeline."

Factors like gender and race aren't the only issue -- where you grow up also has a profound influence on a person's opportunity to innovate. Children who grow up in areas like Silicon Valley are more likely to grow up to become inventors, Chetty found, most likely because they are part of a culture that values innovation and encourages them to try their hand at it. 

By contrast, some parts of the US are veritable innovation deserts, such as Brownsville, Texas, and Mobile, Alabama, which had two of the lowest patent rates among the country's top commuting zones, the research found. (See below for a list of the country's most and least innovative cities.)

Girls are more likely to grow up to become inventors if they grow up in a region with more women innovators, while men's patent rates had no impact, suggesting that female role models are particularly important for girls. While the numbers of women who hold patents is rising, it's slow going. Chetty predicts that, at the current rate, it will take over a century to reach gender parity when it comes to innovation.

"If you value the idea that anyone can start at any starting point and succeed, then obviously our country does not embody that ideal," said Matt Bruenig, the founder of the People's Policy Project, a left-leaning think tank.

But Bruenig expresses skepticism at some of the conclusions of the paper, pointing out that mobility is often constrained by intergenerational issues and the influence of family dynamics. 

"Children fall in similar parts of the income distributions that their parents were in, so I don't know if you can solve that," he said. "People are sticky within their families. They stay in the same region as their families. A perfectly mobile world is kind of a dystopia where you pinball around, breaking off ties with family and relationships."

It may be unlikely that a country can identify all its potential geniuses and set them on a path toward success, Bruenig added. "It's a little unlikely to me because I am sure there is a zero-sum aspect to this," such as who develops an idea first and files for the patent before their rivals.

Nevertheless, that doesn't mean equality of opportunity can't be improved. The research may raise debate about the Republican tax reform effort, which is seeking to slash corporate tax rates on the theory that companies will use the additional profit to give their workers a raise. The lower corporate tax rate is also billed as a way to help companies invest in growth, as well as encourage new business creation from America's next generation of Einsteins and Edisons. 

Yet Chetty is dubious that tax cuts can help the US tap into its underutilized reservoir of talent.

"Changes in financial incentives (e.g., via tax cuts) are less likely to spur additional star inventors to enter the field because the private financial returns to high-impact innovations are already quite large," he wrote. 

The Republican tax reform efforts may worsen inequality and lead to more missed opportunities for children who lack the advantages of wealth and privilege, said Elise Gould, senior economist at the liberal Economic Policy Institute. Because the tax bill is regressive -- meaning poorer families will bear more of the burden than wealthier ones -- it will put disadvantaged households at greater risk of financial insecurity, she said. 

"The payment for it will come down the pike and [lawmakers] will likely reduce social safety nets" such as food stamps and other anti-poverty programs, Gould said. "If you reduce those programs, that will reduce their economic future."

If tax cuts won't help unearth talented youngsters, what will? Chetty recommends policies that could help promote economic mobility and draw more low-income and minority children into innovation/

The commuting zones with the highest and lowest rates of inventors per 1,000 children:

Highest:

  1. San Jose, California
  2. Madison, Wisconsin
  3. Minneapolis, Minnesota
  4. San Francisco, California
  5. Detroit, Michigan
  6. Boston, Massachusetts
  7. Allentown, Pennsylvania
  8. Milwaukee, Wisconsin
  9. Manchester, New Hampshire
  10. Newark, New Jersey

Lowest:

  1. Brownsville, Texas
  2. Mobile, Alabama
  3. Lakeland, Florida
  4. Fayetteville, North Carolina
  5. Little Rock, Arkansas
  6. Modesto, California
  7. Fresno, California
  8. El Paso, Texas
  9. Virginia Beach, Virginia
  10. Birmingham, Alabama