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'Creative destruction': What's behind Nobel in economics 2025 to Mokyr, Aghion and Howitt
Joel Mokyr gets one half of prize money; other half goes jointly to Philippe Aghion and Peter Howitt
The Royal Swedish Academy of Sciences, which awarded the 2025 Nobel Prize in Economics Joel Mokyr, Philippe Aghion and Peter Howitt, on October, shared succinct reasons for why they have won.
Combined, they won “for having explained innovation-driven economic growth”, it said. Joel Mokyr of Northwestern University, US, gets one half of the prize money “for having identified the prerequisites for sustained growth through technological progress”.
The other half goes jointly to Philippe Aghion, from Collège de France and INSEAD, Paris, and The London School of Economics and Political Science, UK; and Peter Howitt of Brown University, US, “for the theory of sustained growth through creative destruction”.
The prize amount is 11 million Swedish kronor (around 1.2 million US dollars).
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These three men showed how new technology can drive sustained growth, the academy said while awarding them what's formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
“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. This year’s laureates in economic sciences, Joel Mokyr, Philippe Aghion and Peter Howitt, explain how innovation provides the impetus for further progress,” the academy noted in its press release.
It added that technology's rapid progress, and replacement of older methods and products with new ones is never-ending. “This is the basis for sustained economic growth, which results in a better standard of living, health and quality of life for people around the globe,” it stressed.
But it underlined that this understanding of technology wasn't always the case. “Quite the opposite – stagnation was the norm throughout most of human history,” it said, “Despite important discoveries now and again, which sometimes led to improved living conditions and higher incomes, growth always eventually levelled off.”
That's where the trio came in.
How Joel Mokyr contributed to global progress
Joel Mokyr studied how we evolved from from being stagnant to accepting that sustained growth is the new normal.
His research showed that innovations can continue to come one after another “in a self-generating process”. But for that, “we not only need to know that something works, but we also need to have scientific explanations for why”.
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His historical research alerted the global community to the fact that we often lacked focus on “scientific explanations” before the Industrial Revolution. That made it difficult to build upon new discoveries and inventions, he found, as a note of caution for future generations.
“He also emphasised the importance of society being open to new ideas and allowing change,” the Nobel committee said.
How Philippe Aghion and Peter Howitt pushed humanity forward
The other two winners, Philippe Aghion and Peter Howitt, also studied the mechanisms behind sustained growth. While Joel Mokyr focused on history and human behaviour towards tech and innovation over centuries, Aghion and Howitt “constructed a mathematical model for what is called creative destruction”.
The idea of creative destruction is described as when a new or better product enters the market, companies selling the older ones lose out. “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 noted, explaning their work.
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“In different ways, the laureates show how creative destruction creates conflicts that must be managed in a constructive manner. Otherwise, innovation will be blocked by established companies and interest groups that risk being put at a disadvantage.” it added.
The committee also stressed that the 2025 laureates’ work shows that economic growth cannot be taken for granted. "We must uphold the mechanisms that underly creative destruction, so that we do not fall back into stagnation,” said John Hassler, chair of the committee for the prize in economics.
Know the Nobel in economics 2025 winners
- Joel Mokyr, born 1946 in Leiden, the Netherlands, got his PhD 1974 from Yale University in the US. He is a professor at Northwestern University in the US now.
- Philippe Aghion, born 1956 in Paris, got his PhD in 1987 from Harvard University, Cambridge, US, and is a professor at Collège de France and INSEAD, Paris, France and The London School of Economics and Political Science, UK.
- Peter Howitt, born 1946 in Canada, got his PhD in 1973 from Northwestern University in the US and now is a professor at Brown University in the same country.
