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October 28, 2026

What governs the direction of innovation?

Evidence from mobile app usage shows that innovators tend to create products for consumers who are similar to themselves.

Tyler Smith

Source: viewapart

Economists have traditionally explained the direction of innovation through market size and profits. But historical examples suggest that innovators’ life experiences also play a role. Josephine Cochrane, for example, patented a hand-powered dishwasher in 1886, motivated in part by a desire to protect her fine china from being chipped during hand washing. 

In a paper in the American Economic Review, Elias Einiö, Josh Feng, and Xavier Jaravel study this "social push" mechanism systematically, linking innovators to the consumers of their products. The authors document widespread innovator–consumer homophily, the tendency for innovators to create products used disproportionately by people who resemble them in terms of gender, socioeconomic status, and age. 

The researchers leveraged several consumption datasets covering the full consumption baskets of American households, including new data for mobile phone applications. They matched information about the founders of venture-backed startups to data that tracked the monthly app usage of a representative sample of 10,000 US consumers from 2017 to 2019.  

Figure 1 from the authors’ paper illustrates the homophily found in these data.

Figure 1 from Einiö et al. (2026)

The two histograms plot the fraction of an application's time usage accounted for by female users. The blue bars indicate apps from startups with at least one female founder, whereas the white bars indicate apps from startups whose founders were all male.

Both distributions cluster at the extremes, with many apps used almost entirely by men or almost entirely by women. These tails show that homophily primarily stems from gender-specialized applications that have more than 90 percent or less than 10 percent female users. 

The researchers also found that women accounted for 54 percent of time spent on these apps, and that moving from an all-male to an all-female founding team raised that share by 11.2 percentage points. 

Because women remain underrepresented among innovators, these patterns may have broader consequences. Using a growth model calibrated to the evidence, the researchers estimate that access barriers for entering innovation careers results in fewer products tailored to women’s tastes, which increases their costs. In the model, this raises women’s cost of living relative to men’s by 18.7 percent, a gap nearly as large as the 20.5 percent gender pay gap.