News: The Royal Swedish Academy of Sciences awarded the 2025 Economics Nobel to Joel Mokyr, Philippe Aghion, and Peter Howitt for innovation-driven growth.
About Nobel Prize in Economic Sciences 2025
- It is the “Sveriges Riksbank Prize” in Economic Sciences in Memory of Alfred Nobel 2025,” popularly called the Nobel prize for economics.
- Winners of 2025 Prize
- Joel Mokyr – Northwestern University, US.
- Philippe Aghion – Collège de France, INSEAD, and LSE.
- Peter Howitt – Brown University, US.
- Prize money is 11 million Swedish kronor (Rs 10.25 crore); half goes to Mokyr, and the other half is shared between Aghion and Howitt.
- Recognized work: It recognizes their explanation of innovation-driven economic growth and why sustained growth emerged in the last two centuries when stagnation dominated most of human history.
- Key contribution by winners
- Joel Mokyr (economic historian)
- Joel Mokyr used historical sources as one means to uncover the causes of sustained growth becoming the new normal.
- He demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why.
- The latter was often lacking prior to the industrial revolution, which made it difficult to build upon new discoveries and inventions.
- He also emphasised the importance of society being open to new ideas and allowing change.
- Philippe Aghion & Peter Howitt
- Both also studied the mechanisms behind sustained growth.
- They constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, the companies selling the older products lose out.
- The innovation represents something new and is thus creative.
- However, it is also destructive, as the company whose technology becomes passé is outcompeted.
- Joel Mokyr (economic historian)
