The Wellbeing Framework’s measure of innovation misses the mark

by Jack Thrower and Greg Jericho


The Wellbeing Framework aims to measure what matters, but its measure of innovation has little to do with research or development

Innovation is an important aspect of an economy – it helps foster economic growth and improved living standards.  And yet the Government’s Well-Being framework released in July, despite arguing it “measures what matters” has some very odd measures of innovation.

Rather than focus on what matters for innovation such as the level of research and development, the framework instead measures the number of trademarks and trademark and patent application numbers.

Innovation is tricky enough to measure, but trademark and patent application numbers give a distorted picture of the scale and type of innovation we care about. The Wellbeing framework notes this itself, calling the measure “fairly limited”.

Trademarks are things like logos, brand names, or anything with a ‘TM’ in the corner. They are used to distinguish goods or services, not innovation.

Trademarks can represent new products and businesses, but there is very little correlation between them and innovation. While trademark classes covering scientific apparatus and technological services are significant contributors to trademark application numbers, so too are trademarks for things like pet kennels, karate studios and jewellery. These are products many of us enjoy consuming but using them as a key metric of innovation is questionable.

IP Australia, for example, recommends when registering a new trademark to check your spelling (“also consider ‘eezy’, ‘ezy’ and ‘eezee’ “). This is hardly a sign of great innovation.

Patents, meanwhile, are the right to commercially exploit an invention such as medicines and computer technology. This is a better metric than trademarks, as clearly there are some very useful and innovative patents, from iPhones to bionic eyes. But overreliance on this metric is also problematic.

Most useful innovations are either not patented (such as those stemming from public research) or not patentable (such as the discovery of DNA). Many medical patents can also be for doubtfully useful innovations (such as me-too drugs).

This metric also fails to account for changes in population and combines foreign and domestic patent numbers. Finally, overreliance on this metric ignores the numerous problems with patents, such as patent thickets and patent trolls, where the object of a patent is to protect profits and actually serve to limit the dispersion of knowledge and greater innovation.

No metric for innovation is perfect, but a good start would be ditching trademarks and replacing them with figures such as government budget allocations on research and development (GBARD).

Direct government spending on research and development is an increasingly important way to boost innovation, creating new knowledge and allowing it to freely spread across our economy. It also allows government to coordinate and steer innovation in socially useful directions, such as towards mitigating the climate crisis rather than making social media even more addictive.

Unfortunately, Australia’s GBARD is well below the OECD average and has fallen in recent years, if we want to measure what matters, adding this metric would be a great start.

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