Nobel Prize in Economics rewards 3 researchers for explaining economic growth based on innovation

Joel Mokyr, Philippe Aghion and Peter Howitt won the Nobel Prize in economics on Monday for their research on the impact of innovation on economic growth and how new technologies replace old ones, a key economic concept known as “creative destruction.”

The winners represent contrasting but complementary approaches to economics. Mokyr is an economic historian who looked at long-term trends using historical sources, while Howitt and Aghion relied on mathematics to explain how creative destruction works.

Mokyr, 79, born in the Netherlands, graduated from Northwestern University; Aghion, 69, from the Collège de France and the London School of Economics; and Canadian-born Howitt, 79, of Brown University.

Mokyr was still trying to get his morning coffee when an AP reporter contacted him on the phone and said he was shocked to win the prize.

“People always say that, but in this case I’m telling the truth: I had no idea something like this was going to happen,” he said.

His students had asked him about the possibility of him winning the Nobel, he said. “I told them I had a better chance of being elected pope than winning the Nobel Prize in economics – and besides, I’m Jewish.”

Mokyr turns 80 next summer but said he has no plans to retire. “This is the kind of job I’ve dreamed of my whole life,” he said.

Like his compatriot Mokyr, Aghion also expressed his surprise at the honor. “I can’t find the words to express what I feel,” he said by telephone during the press conference in Stockholm. He said he would invest his prize money in his research laboratory.

Asked about current trade wars and protectionism around the world, Aghion said: “I do not welcome the protectionist path of the United States. It is not good for… global growth and innovation.”

Winners were recognized for better explaining and quantifying “creative destruction,” a key concept in economics that refers to the process by which new, beneficial innovations replace – and thus destroy – older technologies and businesses. The concept is generally associated with economist Joseph Schumpeter, who described it in his 1942 book “Capitalism, Socialism and Democracy.”

The Nobel committee said Mokyr “demonstrated that if innovations are to follow one another in a self-generated process, we must not only know that something works, but we must also have scientific explanations for why.”

Mokyr has long been known as an optimist about the positive effects of technological innovation.

In a 2015 interview with the AP, he cited the music streaming service Spotify as an example of an “absolutely astonishing” innovation that economists had difficulty measuring. Mokyr noted that he once owned more than 1,000 CDs and, before that, “I spent a lot of my graduate student budget on vinyl records.” But he could now access a huge music library for a small monthly subscription.

Aghion and Howitt have studied the mechanisms behind sustained growth, notably in a 1992 paper in which they constructed a mathematical model of creative destruction.

Aghion helped shape French President Emmanuel Macron’s economic agenda during his 2017 election campaign. Most recently, Aghion co-chaired the Commission on Artificial Intelligence, which submitted a report to Macron in 2024 containing 25 recommendations to position France as a leading force in the field of AI.

“The work of the winners shows that economic growth cannot be taken for granted. We must preserve the mechanisms that underlie creative destruction, so as not to fall back into stagnation,” said John Hassler, chair of the Economics Prize Committee.

Half of the 11 million Swedish crown (nearly $1.2 million) prize goes to Mokyr and the other half is shared by Aghion and Howitt. Winners also receive an 18-karat gold medal and a diploma.

The economics prize is officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. The central bank established it in 1968 in memory of Nobel, the 19th-century Swedish businessman and chemist who invented dynamite and created the five Nobel Prizes.

Since then, it has been awarded 57 times, for a total of 99 winners. Only three of the winners were women.

Nobel purists point out that the economics prize is not technically a Nobel Prize, but is still awarded with the others on December 10, the anniversary of Nobel’s death in 1896.

Nobel Prizes were announced last week in the fields of medicine, physics, chemistry, literature and peace.

Announcement from the Nobel committee:

The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025 to Joel Mokyr, Philippe Aghion and Peter Howitt

“for explaining economic growth driven by innovation”

with half to

Joel MokyrNorthwestern University, Evanston, Illinois, United States

“for having identified the conditions for sustainable growth thanks to technological progress”

and the other half jointly with

Philippe AghionCollège de France and INSEAD, Paris, France, The London School of Economics and Political Science, United Kingdom

Peter HowittBrown University, Providence, RI, USA

“for the theory of growth sustained by creative destruction”

They show how new technologies can generate sustainable growth

Over the past two centuries, for the first time in history, the world has experienced sustained economic growth. This lifted large numbers of people out of poverty and laid the foundation for our prosperity. This year’s winners in economics, Joel Mokyr, Philippe Aghion and Peter Howitt, explain how innovation provides the impetus to go further.

Technology is changing rapidly and affecting us all, with new products and production methods replacing old ones in a never-ending cycle. It is the basis for sustainable economic growth, which translates into better living standards, better health and better quality of life for people around the world.

However, this was not always the case. Quite the contrary: stagnation has been the norm for most of human history. Despite important one-off discoveries, which sometimes led to an improvement in living conditions and an increase in income, growth always ends up stabilizing.

Joel Mokyr used historical sources to uncover the causes of sustained growth becoming the new normal. He demonstrated that for innovations to occur in a self-generated process, we must not only know that something works, but we must also have scientific explanations for why. These were often lacking before the industrial revolution, making it difficult to take advantage of new discoveries and inventions. He also stressed the importance of society being open to new ideas and enabling change.

Philippe Aghion and Peter Howitt also studied the mechanisms of sustained growth. In a 1992 paper, they built a mathematical model for what’s called creative destruction: When a new, better product hits the market, the companies selling the older products lose out. Innovation represents something new and is therefore creative. However, it is also destructive because the company whose technology becomes outdated is outclassed.

In different ways, the winners show how creative destruction creates conflicts that must be managed constructively. Otherwise, innovation will be blocked by established companies and interest groups who risk being disadvantaged.

“The work of the winners shows that economic growth cannot be taken for granted. We must preserve the mechanisms that underlie creative destruction, so as not to fall back into stagnation,” says John Hassler, chair of the Economics Prize Committee.

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