The Washington Post's Alan Sipress writes about a new development in valuing intellectual property link here. The notion is that the total market value of a company less the value of its tangible assets reflects the value of its patents, copyrights, trademarks, and trade secrets.

This formulation was arrived at from calculations showing that the market value of companies increasingly reflects their intangible assets. Using the market value of the S&P 500 Index and the accounting value of their tangible assets, an investment research firm called Ocean Tomo estimated that intangibles have gone from 17 percent of total market value in 1975 to 80 percent in 2005. Behind this is the notion that the value of tangibles has gone down through offshoring of goods and services. The article also notes that a stock index based on intellectual capital called the Claymore/Ocean Tomo Patent ETF is traded on the American Stock Exchange.

Comment: Nothing is said about the overall level of the stock market in determining intellectual property values. I suppose it would be possible to factor that in. In any case, the new notion is that the heart of our economy is intellectual capital. This economist would like to see some attempt to estimate total factor productivity in the market value of companies to reflect their differential ability to add value.