Joel Mokyr, Philippe Aghion, Peter Howitt win Nobel Prize for Economics

The Nobel Prize Committee announced on Monday that the Nobel Prize in Economics has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt.  This is the final prize of the Nobel season.

While Mokyr received the Nobel Prize for identifying the prerequisites for sustained growth through technological processes, Aghion and Howitt received the prize for the theory of sustained growth through creative destruction. 

As per the Nobel Committee, Philippe Aghion and Peter Howitt studied the mechanisms behind sustained growth. Citing an article from 1992, the Committee said that they constructed a mathematical model for "creative destruction", i.e., a phenomenon wherein the companies selling the older products lose out because a new and better product enters the market. 

"The innovation represents something new and is thus creative. However, it is also destructive, as the company whose technology becomes passé is outcompeted," the Committee said. It added that their model indicates strong forces are pulling in different directions with respect to investment in research and development and, thus, economic growth. 

Depending on factors such as the market and period of time, the need to subsidise R&D may vary. The committee furthermore said that the 2025 laureates proved that sustainable growth can't be taken for granted. 

"Economic stagnation, not growth, has been the norm for most of human history. Their work shows that we must be aware of, and counteract, threats to continued growth. These threats may come from a few companies being allowed to dominate the market, restrictions on academic freedom, expanding knowledge at regional rather than global levels, and blockades from potentially disadvantaged groups. If we fail to respond to these threats, the machine that has given us sustained growth, creative destruction, may cease working – and we would once again need to become accustomed to stagnation. We can avoid this if we heed the laureates’ vital insights," it added.