The Royal Swedish Academy of Sciences on Monday awarded the 2025 Nobel Memorial Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt “for having explained innovation-driven economic growth.” According to the Academy, one half of the prize goes to Joel Mokyr “for having identified the prerequisites for sustained growth through technological progress,” while the other half is shared by Philippe Aghion and Peter Howitt “for the theory of sustained growth through creative destruction.”Mokyr is from Northwestern University, Aghion from the College de France and the London School of Economics, and Howitt from Brown University.Over the last two centuries, for the first time in history, the world has seen sustained economic growth, lifting vast numbers of people out of poverty and laying the foundation of prosperity. As per the Nobel Prize organisation, the 2025 laureates explain how innovation provides the impetus for further progress.In a post on X, the Nobel Prize organisation said, “Over the last two centuries, for the first time in history, the world has seen sustained economic growth. This has lifted vast numbers of people out of poverty and laid the foundation of our prosperity. ”Technology advances rapidly and affects us all, with new products and production methods replacing old ones in a never-ending cycle. This is the basis for sustained economic growth, which results in a better standard of living, health, and quality of life globally.However, stagnation was the norm throughout most of human history. Despite occasional discoveries, growth often levelled off. The 2025 laureates have taught that sustained growth cannot be taken for granted. Their work shows that threats to continued growth — including market monopolies, restrictions on academic freedom, uneven knowledge expansion, and social blockades — must be actively countered to avoid a return to stagnation.Philippe Aghion and Peter Howitt constructed a mathematical model for creative destruction, showing how new innovations replace old products, benefiting society while outcompeting existing firms. Their model demonstrates how investment in research and development (R&D) and economic growth is influenced by market conditions and other dynamic factors. Joel Mokyr’s research in economic history highlights that a continual flow of useful knowledge — both propositional (systematic descriptions of the natural world) and prescriptive (practical instructions or recipes) — is essential for sustained growth. He emphasised that societies must remain open to new ideas and adaptable to change for innovation to generate long-term prosperity.The Nobel committee noted that Mokyr demonstrated the need for scientific explanations to understand why innovations succeed.Aghion said he was shocked by the honour, adding that he would invest his prize money in his research laboratory. He also cautioned against protectionist policies, saying, “I am not welcoming the protectionist way in the US. That is not good for … world growth and innovation.”The award, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968 by Sweden’s central bank to commemorate Alfred Nobel. Although not part of Nobel’s original will, it is presented alongside the other Nobel honours on December 10, the anniversary of Nobel’s death in 1896.Last year’s prize went to Daron Acemoglu, Simon Johnson, and James A Robinson for explaining why some nations thrive while others remain poor, highlighting the role of open and inclusive institutions in promoting prosperity.Since 1969, the economics prize has been awarded 56 times to 96 laureates, with only three women among the recipients before last year. The oldest winner remains Leonid Hurwicz, honoured at 90, while the youngest is Esther Duflo, awarded at 46.Presented by the Royal Swedish Academy of Sciences in Stockholm, the prize recognises outstanding contributions that deepen understanding of economic behaviour and the mechanisms that underpin growth.Today’s announcement marks the conclusion of the 2025 Nobel season, following awards in medicine, physics, chemistry, literature, and peace.
