The Indispensable Role of Economic History in Understanding Innovation and Intellectual Property Policy

Petra Moser, a professor at NYU specializing in creativity and innovation, argues forcefully against the common dismissal of history by economists, asserting that economic history provides crucial insights for contemporary policy analysis. She contends that historical contexts offer a clearer understanding of policy changes and their effects, often revealing nuances that are obscured in modern, rapidly changing environments. Moser emphasizes the need for careful consideration of differences across industries when applying policy results, a task greatly facilitated by historical analysis.

Moser's research focuses on the impact of intellectual property rights (IPR), specifically patent and copyright laws, on innovation. She highlights the methodological challenge of studying IPR effects, noting the inadequacy of relying solely on patent data. To overcome this, she has developed alternative historical datasets, such as exhibits from 19th-century World Fairs, to examine innovation differences across countries and over time. Her findings suggest that while basic IPR protection encourages innovators, overly strong intellectual property rights may not always be beneficial, and the adoption of patent systems can influence not only the quantity but also the *type* of innovations a country produces. For instance, countries without patent systems, like 19th-century Switzerland and Denmark, were innovative but focused on industries not requiring patent protection.

A key distinction Moser draws is between patents and copyrights, stressing that they are "completely different animal[s]" and require separate research. She illustrates this with the historical case of Italy, where the timing of Napoleon's military victories relative to the passage of the Code Civil in France led to different regions adopting or not adopting French copyright laws. This natural experiment allowed her to observe that regions with basic copyright protection saw composers produce "better and more operas." This finding underscores the importance of understanding the specific mechanisms of each IPR type, especially given the unique characteristics of copyrights, which are narrower but extremely long-lived compared to patents.

The broader implications of Moser's work are significant for current policy-making, particularly in the era of content digitalization. She advocates for a substantial increase in research on copyright, as the existing literature heavily favors patents, despite the critical policy relevance of copyrights for fostering creativity in the digital age. Economic history, with its advantage of hindsight, offers a unique lens to analyze the long-term effects of policy changes and to account for confounding factors, making it an invaluable tool for guiding future innovation and intellectual property policies.

economists often say oh this is you can our history it's not relevant this is like long time ago why should something that happened 150 years ago be relevant to today

at least I know what happened 150 years ago whereas you don't really know what happened five years ago

economic history allows us to do it precisely that

very strong intellectual property rights in innovation or creativity typically don't help but basic protection appears to encourage innovators and creative individual to produce more and better work

when a country adopts a patent system it may not only affect the level of innovations but also the type of innovations that a country produces

Italy is an interesting case because Italy had a lot of changes in the law in the nineteenth century as part of a political process

we cannot use research on patents to help guide policy on copyrights because it's completely different animal

copyrights are much more narrow than patents and they are extremely long-lived today

when composers have access to basic copyright protection they produce better and more operas

economic history can contribute to this research because we just know a lot more with hindsight about the settings in which policy changes take place