The laureates of this year's Nobel Prize in Economics, Joel Mokyr, Philippe Aghion, and Peter Howitt, explain how innovations drive further progress.
«The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2025 to Joel Mokyr, Philippe Aghion, and Peter Howitt „for explaining innovative economic growth“. One half of the prize will be awarded to Mokyr „for identifying the prerequisites for sustainable growth through technological progress“, and the other half jointly to Aghion and Howitt „for the theory of sustainable growth through creative destruction“», — states the official account of the prize on X.
Mokyr demonstrated that for innovations to succeed each other in a self-generating process, it is necessary not only to know that something works but also to have scientific explanations for why it does. He also emphasized the importance of society's openness to new ideas and acceptance of change.
Philippe Aghion and Peter Howitt also studied the mechanisms underlying sustainable growth. In a 1992 paper, they developed a mathematical model of so-called creative destruction: when a new and improved product enters the market, companies selling old products incur losses. Innovation represents something new and is thus creative. However, it is also destructive because a company whose technology becomes obsolete loses competitiveness.
«The work of the laureates shows that economic growth cannot be taken for granted. We must support the mechanisms underlying creative destruction to avoid stagnation», — said John Hassler, chairman of the prize committee in economic sciences.