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What's The Impact of Bars Shutting Down on Innovations and New Ideas?


Some of the world's most groundbreaking ideas were generated over drinks - Apple computers, Southwest Airlines, even buffalo wings. Now that so many bars are closed, and fewer people are meeting up for a beer or a cocktail, what will that do to innovation and new ideas? Well, Stacey Vanek Smith and Alex Mayyasi from our daily economics podcast, The Indicator From Planet Money, take a look.


STACEY VANEK SMITH: OK, Alex, we should explain. We are here at a bar in Brooklyn.

ALEX MAYYASI: What's it called, Stacey?

SMITH: It is called the Bearded Lady.

MAYYASI: A great name. And we are here to talk about new ideas, innovation, invention. And that leads us to the bar.

SMITH: Yes - and to a man named Mike Andrews. So a few years ago, Mike Andrews also was in a bar.

MAYYASI: Joe's Place in Iowa City. As a grad student, Mike had gotten really interested in innovation and new ideas.

MIKE ANDREWS: And I think it was an accounting grad student, Steve (ph), my buddy Steve, said, hey, you should look at if people come up with more ideas out at bars.

SMITH: Do bars foster innovation? I mean, it's a good question. There's a long history of bars and innovation and ideas. And Mike says there's actually a really easy way to measure this.

ANDREWS: Federal alcohol prohibition - right? - the 18th Amendment.

SMITH: Prohibition - it lasted for more than 10 years in the U.S. All of the bars were shut down all across the country. And so Mike looked at patent applications before Prohibition and then after Prohibition had started to see if shutting down all the bars had had an effect on ideas and innovations.

ANDREWS: What I found was - frankly, was pretty striking. You see a drop in patents by, depending on exactly how you measure things, 5- to 15%. So it's large.

MAYYASI: It is really large. In fact, Mike says that the same drop-off happened during the Great Depression.

SMITH: Yeah, the Great Depression, when unemployment hit 25%. At that time, patent applications dropped by 15%.

Are you saying that the secret sauce for innovation is, like, beer?

ANDREWS: (Laughter) This is not a story about alcohol. And, in fact, that's something I can look at in the data. It's really the conversation. I think it's the fact that there's this setting where people are able to get together, right? They're off the clock. There's no one setting an agenda. You can just mingle.

MAYYASI: But right now, we are not striking up conversations in bars and coffee shops - or at least not nearly as much.

ANDREWS: That might lead you to be very pessimistic or very worried. But I think there's also an optimistic way to think - to look at these results.

SMITH: So prohibition lasted for more than 10 years, but the patent slump did not. It actually recovered after about five years. The patents started rolling in again because people started finding other places to unwind and chat and congregate.

ANDREWS: So instead of going to the bar, maybe you'll go to the church picnic, or I figure out where the speakeasies open up, and we're able to rebuild those informal social networks and really recover.

SMITH: Which brings us to today, when a lot of our socializing and human interaction has just gone away because of the coronavirus pandemic. What effect will that have on idea generation?

MAYYASI: Mike says there's a lag between innovation that happens and his patent data. So it'll take a while before we can actually use data to answer this question.

SMITH: Just to be safe, though, Alex, we decided that it was very important that we come here to the Bearded Lady and discuss ideas for the economy.

MAYYASI: Cheers.

SMITH: Cheers.


MAYYASI: Alex Mayyasi.

SMITH: Stacey Vanek Smith, NPR News.

(SOUNDBITE OF JOSH RITTER'S "HARRISBURG LIVE") Transcript provided by NPR, Copyright NPR.

Stacey Vanek Smith is the co-host of NPR's The Indicator from Planet Money. She's also a correspondent for Planet Money, where she covers business and economics. In this role, Smith has followed economic stories down the muddy back roads of Oklahoma to buy 100 barrels of oil; she's traveled to Pune, India, to track down the man who pitched the country's dramatic currency devaluation to the prime minister; and she's spoken with a North Korean woman who made a small fortune smuggling artificial sweetener in from China.
Alex Mayyasi