Nobel Prize in Economics 2025

The Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics 2025 to Joel Mokyr, Philippe Aghion and Peter Howitt “for having explained innovation-driven economic growth”.

What is Nobel Prize in Economics?

The official name is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It was established in 1968 by Sweden’s central bank (Sveriges Riksbank) in memory of Alfred Nobel, and first awarded in 1969.
Though not one of the original five prizes in Nobel’s will, it is administered in the same framework by the Nobel Foundation and awarded alongside the other Nobel Prizes.
The award recognises contributions in economic science that have conferred the greatest benefit on humankind.

The Royal Swedish Academy of Sciences awarded the 2025 Nobel Prize in Economic Sciences to Joel Mokyr (Northwestern University, US), Philippe Aghion (Collège de France, INSEAD, and LSE) and Peter Howitt (Brown University, US).
One half of the prize will go to Joel Mokyr “for identifying the prerequisites for sustained growth through technological progress.”
The other half will be shared jointly by Philippe Aghion and Peter Howitt “for the theory of sustained growth through creative destruction.”

Mokyr delved deep into the historical roots of technological progress and its impact on economic development.
His research emphasises the crucial role of “useful knowledge” – the combination of scientific understanding and practical application – as the engine of innovation.
He highlighted how Europe’s Scientific Revolution fostered sustained economic growth by combining technological progress with intellectual development.
He explained that blending practical “prescriptive” knowledge (knowing how) with theoretical “propositional” knowledge (knowing why) created a self-sustaining innovation ecosystem.
Mokyr coined the term ‘Industrial Enlightenment‘ to describe a period when openness to new ideas and scientific curiosity fuelled cycles of innovation and productivity.

Aghion and Howitt created mathematical models based on Joseph Schumpeter’s theory of “Creative Destruction.”
Their model illustrates that economic progress is an inherently disruptive process. New, more efficient technologies and business models emerge, rendering existing ones obsolete. This constant churning, while challenging for incumbents, is the primary driver of long-term improvements in productivity and living standards.
They emphasised that strong competition, education, & research investment are crucial for sustaining innovation-driven growth.
Their research has had a profound impact on how economists and policymakers think about competition, intellectual property, and the role of government in fostering an innovative economy.