On October 13, 2025, the world of economics woke up to a jolt of excitement as three researchers—Joel Mokyr, Philippe Aghion, and Peter Howitt—were awarded the Nobel memorial prize in economics for their groundbreaking work explaining how innovation fuels economic growth through the process of "creative destruction." The trio, hailing from Northwestern University, Collège de France and London School of Economics, and Brown University respectively, have each carved out distinct but complementary paths in the study of how new technologies and ideas overhaul the economic landscape, often leaving older companies and industries in their wake.
According to the Associated Press, the prize recognizes research that has transformed how economists and policymakers understand progress itself. The concept at the heart of their work—"creative destruction"—is hardly new. It was first described by economist Joseph Schumpeter in his 1942 classic, Capitalism, Socialism and Democracy, where he called it "the essential fact about capitalism." Yet, as John Hassler, chair of the Nobel committee for economic sciences, emphasized, "The laureates' work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underlie creative destruction, so that we do not fall back into stagnation."
The Nobel economics prize, officially titled the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, carries a weighty legacy. Established in 1968, it is awarded each December 10th, on the anniversary of Nobel's death, alongside the more traditional Nobel prizes in medicine, physics, chemistry, literature, and peace. This year, the winners split a prize of 11 million Swedish kronor (nearly $1.2 million), with half going to Mokyr and the other half shared by Aghion and Howitt. The honor also comes with an 18-carat gold medal and a diploma—a tangible reminder of their impact on the field.
Mokyr, 79, is a Dutch-born economic historian at Northwestern University. He has spent decades mining historical sources to uncover how waves of innovation, from the steam engine to the internet, have repeatedly transformed societies. Mokyr's approach is rooted in the long view. He demonstrated that for innovations to succeed one another in a self-generating process, "we not only need to know that something works, but we also need to have scientific explanations for why," as the Nobel committee put it. Mokyr has often argued against the pessimistic view that recent inventions—like smartphones or streaming services—have less economic impact than earlier breakthroughs such as the airplane or automobile. In a 2015 interview with AP, he cited music streaming platforms as "absolutely astonishing" innovations, noting the challenge economists face in measuring their true value when so many new services are cheap or even free.
Philippe Aghion, 69, splits his time between the Collège de France and the London School of Economics. Alongside Canadian-born Peter Howitt, 79, of Brown University, Aghion developed a mathematical model in 1992 that offered new insights into the mechanics of creative destruction. Their model added nuance to Schumpeter's original idea, showing how markets dominated by a handful of big companies can actually stifle innovation and economic growth—a concern that resonates today in industries from telecommunications to social media. They also emphasized that innovation-driven change, while disruptive, can be made less painful if societies focus on supporting workers rather than protecting specific jobs, and by promoting social mobility so that a person’s profession isn’t dictated by their parents’ status.
The practical examples of creative destruction are everywhere, as highlighted by AP: e-commerce shuttering traditional retail stores, streaming services replacing physical video rentals, and the rise of automobiles spelling the end for horse-drawn wagons. Yet, for all the economic churn, Mokyr and his colleagues have shown that these cycles of renewal are the engine of prosperity and human welfare. The Nobel committee noted that economic stagnation was the norm for most of human history until the Industrial Revolution in the 18th century unleashed sustained growth—thanks, in large part, to the very sort of innovation the laureates have studied.
The announcement of the prize was met with a mixture of shock, humility, and delight. Mokyr, who will turn 80 next summer, recounted to AP that he was still trying to get his morning coffee when he learned the news. "People always say this, but in this case I am being truthful—I had no clue that anything like this was going to happen," he said, adding with a chuckle, "I told [my students] that I was more likely to be elected Pope than to win the Nobel Prize in economics—and I am Jewish, by the way." He has no plans to retire: "This is the type of job that I dreamed about my entire life." Howitt, for his part, thought the initial call from a Swedish reporter was a prank. "We had no Champagne in the refrigerator. We were not anticipating this," he joked. Aghion, reached by phone at the Stockholm press conference, said, "I can’t find the words to express what I feel." He added that he would invest his share of the prize money in his research laboratory, and described the honor as "the dream prize, with the people I dreamed of getting it with."
The laureates' work is more than just academic theory; it has real implications for policy and society. Aghion, who helped shape French President Emmanuel Macron’s economic program during the 2017 election campaign, has more recently co-chaired the Artificial Intelligence Commission, which in 2024 submitted 25 recommendations to Macron to help France become a leader in AI. He has warned against the rise of protectionism, particularly in the US, saying, "I am not welcoming the protectionist way in the US. That is not good for ... world growth and innovation." On the topic of AI, Aghion sees "huge growth potential, but it all depends on the institutions and policies we put in place." He argues for policies that foster competition, noting that entrenched giants can use regulations to block new entrants and stifle innovation.
Mokyr, meanwhile, takes a more optimistic view of technological change. He told a news conference at Northwestern that fears of AI as a "monstrosity" threatening humanity are overblown: "Nothing of the sort is ever going to happen." Instead, he sees AI as "primarily a magnificent research assistant" that can process information at lightning speed. And far from machines replacing people, Mokyr believes innovation pushes workers toward "more interesting, more challenging work." Still, he acknowledges that new technologies often cause short-term job losses or reduced earnings, but insists that they also create unexpected opportunities.
For European policymakers, the work of Aghion and his colleagues is especially timely. Europe, according to a report by former European Central Bank head Mario Draghi, faces a growing productivity gap with the US in digital technology. Aghion told AP, "We have to wake up. Because you know who will win in this competition? Those who innovate." The challenge, he argues, is for Europe to boost research and venture capital to turn bright ideas into thriving businesses.
As the world grapples with rapid technological change, the lessons from Mokyr, Aghion, and Howitt’s work are clear: innovation is both disruptive and essential. Societies that embrace creative destruction, support workers through transitions, and keep the doors open for new ideas are the ones most likely to thrive. The Nobel committee’s decision to honor these three scholars is a reminder that economic growth, far from being automatic, depends on the courage to change and the wisdom to adapt.
