Nobel Prize In Economic Sciences Awarded To Joel Mokyr, Philippe Aghion, Peter Howitt
The Royal Swedish Academy of Sciences on Monday announced that the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for their pioneering research explaining how innovation drives long-term economic growth.
Mokyr received half of the prize “for having identified the prerequisites for sustained growth through technological progress”, while Aghion and Howitt shared the other half “for the theory of sustained growth through creative destruction,” the Academy said in its statement.
From Stagnation to Sustained Growth
According to the Royal Swedish Academy of Sciences, technological advancement is a key force shaping societies, replacing old products and production methods with new ones “in a never-ending cycle.” This dynamic process forms the basis of economic growth and improved living standards across the globe.
However, the Academy noted that for most of human history, economic stagnation was the norm. Despite occasional discoveries leading to temporary prosperity, growth would eventually plateau. “The 2025 laureates in economic sciences have taught us that sustained growth cannot be taken for granted,” the Academy stated.
Their research highlights that unchecked monopolies, limits on academic freedom, and barriers to global knowledge sharing can threaten this growth. “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,” it warned.
The Theory of Creative Destruction
Economists Philippe Aghion and Peter Howitt developed a seminal mathematical model in 1992 describing how innovation fuels progress through “creative destruction.” Their model showed that when a superior product enters the market, it displaces older ones, forcing less innovative firms out.
This process, they explained, involves competing forces that influence investment in research and development (R&D) — with the pace and need for public support varying according to time and market conditions.
The Academy said their work “shows that there are strong forces pulling in different directions as regards investment in research and development (R&D) and thus economic growth.”
Joel Mokyr’s Historical Lens on Innovation
Historian Joel Mokyr approached the question of sustained growth through the lens of economic history. His research underscored that a continuous stream of “useful knowledge” — both theoretical and practical — is essential for lasting innovation.
He distinguished between propositional knowledge, which explains why something works through scientific understanding, and prescriptive knowledge, which provides practical steps or designs for how to make it work.
Mokyr demonstrated that before the Industrial Revolution, a lack of understanding about why things worked limited further development. His work also emphasised the importance of an open society that encourages new ideas and embraces change.
A Legacy of Prosperity
Over the past two centuries, humanity has experienced sustained economic growth for the first time in history — lifting millions out of poverty and transforming standards of living.
The Academy concluded that this year’s laureates — Joel Mokyr, Philippe Aghion and Peter Howitt — have collectively illuminated how innovation “provides the impetus for further progress” and ensures that the cycle of creative destruction continues to drive prosperity worldwide.
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