Pg. 338-342

Nordhaus's light experiment showed that a significant majority of the increased output could not be explained by the increases in capital and labor; therefore, output growth is due to technological advances. The issue Solow found with Nordhaus's model is that there is no way to know how much of national income should be spent on R&D, or what the national income would be without R&D. Lucas made the point that the model needed a variable for increasing knowledge. He supported this argument by noting how a large portion of the population drastically altered and improved their standard of living by not conforming to past traditions during the industrial revolution. This revolution was a period of "sustained income growth" and it was not predominantly influenced by a technological advance. Romer's issue was that the model did not include a variable for invention incentives because a country's laws for taxation, finance, banking, and patents affects the pace of technological change. Romer explained how Nordhaus's model followed the same path as all new studies in economics. When young economists are introduced to new studies, they are constricted by the unfamiliarity until new vocabulary and tools are introduced. Then, economists can use these tools to address a wide range of issues. For example, Solow discovered that rich countries continue to grow because they invest in and use capital and knowledge more productively than poor countries. Romer used these tools to explain that inventions are the engine of economic growth. Productivity, efficiency, and inventions are what led to affordable lighting used today.