BL Explainer. All you want to know about the work of Mokyr, Aghion and Howitt, the Nobel winners for economics in 2025

Peter Howitt, a Canadian economist and Professor Emeritus at Brown University, USA, has collaborated closely with Aghion for decades. Together, they have reshaped the way economists think about innovation as the central driver of modern economies.

What was the work for which the award was given?

The 2025 Nobel Prize for Economics recognises their complementary contributions to explaining how innovation fuels long-term economic growth.

Mokyr’s research examines the historical roots of innovation, particularly during Europe’s Industrial Revolution. He argues that the transformation was not just about material resources or institutions, but about a cultural shift towards scientific inquiry, curiosity, and the open exchange of ideas. This intellectual climate allowed knowledge to accumulate and spread, enabling sustained technological progress.

Aghion and Howitt developed the modern “Schumpeterian growth theory”, named after economist Joseph Schumpeter’s concept of “creative destruction”. Their model shows how firms innovate to gain temporary advantages, leading to cycles where new technologies replace old ones, driving productivity and growth. Their later work explored how education systems, competition, regulation and state policy can accelerate or slow down this innovation process.

Together, their work offers both a historical understanding of how innovation cultures emerge and a formal economic model of how innovation translates into growth.

What motivated their study, and how does it build on earlier growth theories like Solow’s?

A key question in economics has always been what drives long-term growth. The Solow model (1950s) showed that capital and labour explain part of growth, but treated technological progress as an external factor, leaving its origins unexplained.

Mokyr, Aghion and Howitt sought to bring innovation inside the model, examining its cultural, institutional and economic drivers. Mokyr looked to history to understand why innovation flourishes, while Aghion and Howitt modelled how incentives, competition and policy shape technological change. Their work provides a post-Solow explanation in which innovation is endogenous, systematic and central to economic growth.

Why is the work relevant in the current context?

Their research offers crucial insights as the world faces slowing productivity growth.

It shows why encouraging innovation is essential for sustained growth, especially in economies that can no longer rely on capital accumulation alone. It provides governments with policy tools, from supporting education and research to ensuring healthy competition, to nurture innovation ecosystems.

Mokyr’s emphasis on knowledge and culture reminds policymakers that fostering innovation is not just about money, but about creating environments where ideas can flourish. As economies undergo rapid technological change, their frameworks help explain how to manage the disruptions of creative destruction while sustaining growth.

How long have the awardees been working on this?

Joel Mokyr began his work on the cultural and intellectual history of economic growth in the 1970s, publishing widely on European economic history over the following decades.

Aghion and Howitt published their landmark paper on Schumpeterian growth in 1992, and have since expanded the theory through decades of research on innovation, institutions, and growth policy.

Collectively, their work spans over 40 years of sustained academic contributions, influencing both theory and policy.

What are the other significant works that have received the Nobel in economics in recent times?

In recent years, the Nobel Prize in Economics has often recognised contributions related to real-world economic challenges. In 2023, Claudia Goldin won for her work on the history and drivers of gender gaps in the labour market.

In 2022, Ben Bernanke, Douglas Diamond and Philip Dybvig were honoured for research on banks and financial crises. In 2019 the prize was awarded to Abhijit Banerjee, Esther Duflo, and Michael Kremer for their experimental approach to alleviating global poverty.

What is the prize money that each awardee will receive?

The total Nobel Prize amount this year is 11 million Swedish kronor (SEK), approximately $1.2 million. Joel Mokyr will receive half the amount at $600,000, while Aghion and Howitt will share the other half equally at $300,000 each.

Beyond the monetary value, the Nobel remains the most prestigious recognition in the field of economics, cementing their place among the most influential economic thinkers of the modern era