A Simple New Measure of Innovation: The Patent Success Ratio

This paper introduces a simple new measure of innovation, the patent success ratio (PSR), namely the ratio of successful patent applications to total patent applications. It has been argued in the extensive literature on innovation and technology policy that patents can serve as an accurate proxy for innovative activity. This paper suggests that PSR is a more accurate measure of how innovative activity changes over time than are transformations of total patent applications and successful patent applications separately. A sensitivity analysis is conducted to assess the usefulness of the new PSR measure of innovation using annual US data for the period 1915-2001.