Technological Progress and Well-Being

Abstract

The Article criticizes the implied choice of preference satisfaction as the criterion of well-being underlying the patent system. Drawing on philosophical literature and on empirical studies in economics and psychology, it reveals the shortcomings of the preference satisfaction criterion and demonstrates that the high demand an innovative product is likely to face in consumer markets does not guarantee that it would significantly enhance overall well-being. By incentivizing the development of certain innovations with a relatively low social value, the patent system may divert resources away from other, more beneficial, activities. In order to better align incentives with social value, this Article contends that innovation law and policy should be predicated on an objective criterion of well-being rather than on preference satisfaction. By holding that certain things are intrinsically valuable for people, an objective criterion allows a shift away from a view of technological progress as an end in itself to its view as a means to enable better lives. Such new perspective entails a more significant role for the state in directing innovation. On a prescriptive level, the proposed approach mandates assigning greater weight to various schemes of direct government funding of innovation, including prizes and grants, as well as certain revisions within patent law itself.