Nobel Prize Awarded for Insight into How Technology Drives Economic Growth
October 14, 2025
The 2025 Nobel Memorial Prize in Economic Sciences has been jointly awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work explaining the conditions under which technological advancements lead to sustained economic growth.
Understanding the Economic "Hockey Stick"
Economists often describe the trajectory of global economic growth over history as resembling a hockey stick laid flat on the ground. For thousands of years, economic growth remained relatively flat, with minimal increases in living standards. Then, around the year 1800, the curve sharply bends upward, signaling a dramatic surge in productivity and prosperity. This inflection point aligns with the onset of the Industrial Revolution, a transformative era that fundamentally reshaped economies and societies worldwide.
What has long puzzled economists is why this surge began precisely around 1800 and why Britain emerged as the cradle of this revolutionary change.
Joel Mokyr’s Historical Analysis
Economic historian Joel Mokyr, a professor at Northwestern University and Tel Aviv University, has dedicated decades to uncovering the forces behind this pivotal historic moment. Mokyr’s work emphasizes the crucial role of the Enlightenment—a sweeping intellectual movement in 18th-century Europe that revolutionized science, philosophy, and politics.
While scientific and technological progress had occurred in many societies before, Mokyr argues that Britain’s unique contribution was its ability to fully embrace and operationalize Enlightenment ideas within its economy. Scientific breakthroughs were not confined to academic circles; instead, they permeated a skilled class of mechanics, entrepreneurs, and inventors. This group applied scientific discoveries to create practical innovations, fueling a cascade of "micro inventions" that collectively boosted productivity.
Furthermore, Britain’s political institutions, especially the Parliament, were relatively open to the disruptive changes—sometimes referred to as “creative destruction”—that new technologies introduced. Unlike many entrenched elites elsewhere, British institutions allowed these innovations to flourish rather than stifle them.
The Role of Creative Destruction
Philippe Aghion and Peter Howitt, who share the Nobel prize with Mokyr, have contributed a theoretical framework to understand how economic growth is driven by continuous waves of innovation and creative destruction—a term coined by economist Joseph Schumpeter. Creative destruction describes the process by which new technologies, products, and business models replace outdated ones. Though this transformation can result in job losses and challenges for established interests, it ultimately fosters economic renewal and long-term growth.
Their mathematical models highlight how this cycle is vital to sustaining growth over time, linking technological innovation to economic development in a dynamic market setting.
Lessons for Today’s Technological Revolution
As the world faces a new era of potentially disruptive technologies such as artificial intelligence and automation, the research honored by the 2025 Nobel Prize offers timely insights. Sustained economic progress depends not just on scientific discovery but also on how societies incorporate these breakthroughs into practical use and navigate the societal changes that follow.
By understanding the interplay between innovation, skills, institutions, and economic incentives, policymakers and business leaders can better foster environments that enable technology to drive prosperity.
Additional Resources
Joel Mokyr has previously shared his expertise on NPR’s Planet Money, including episodes titled “When Luddites Attack” and “Imagining a World Without Oil.” For listeners and readers interested in a deeper exploration of economic growth and technology, the Planet Money book includes an in-depth chapter on these themes, complete with engaging visuals.
The laureates’ work collectively deepens our understanding of the historical and ongoing forces that propel economies forward, reminding us that the future of growth lies in embracing and thoughtfully managing technological change.
For more information, listen to the full Planet Money discussions or visit planetmoneybook.com to preorder the book.
