A recent paper co-authored by Talay joins several other studies (e.g., Anthony 2009 and Field 2011) in claiming that economic downturns encourage economic innovation.
I have always found these studies deeply puzzling. When I acquire infinite time, I plan to hunker down and try to figure out what is going on.
My initial hypothesis is that downturns do not actually help innovators, but that those entrepreneurs who persist in bringing new goods to market during a downturn either have higher levels of perseverance or else have better new goods.
In other words the puzzling results are due to a selection issue–other things are not equal, and downturns do not encourage innovation.
The WSJ article that summarizes the recent paper is:
(Note: the online version of the WSJ article has the date June 12, 2025, and has the title “Yes or No: It’s Smart to Launch a New Product in a Recession.”)
The recent academic published paper co-authored by Talay and summarized in The Wall Street Journal article mentioned and cited above is:
The two books cited above that support the claim that downturns encourage innovation are:
Anthony, Scott D. The Silver Lining: An Innovation Playbook for Uncertain Times. Boston, MA: Harvard Business School Press, 2009.
Field, Alexander J. A Great Leap Forward: 1930s Depression and U.S. Economic Growth, Yale Series in Economic and Financial History. New Haven, CT: Yale University Press, 2011.