Daron Acemoglu, Simon Johnson and James A. Robinson receive the 2024 Nobel Prize in Economics for the study of the mechanisms that determine the wealth or poverty of countries, highlighting the crucial role played by political and economic institutions. The award, worth 950,000 euros ($1,035,000 at the exchange rate), crowns decades of research by the three academics on the topic of economic inequality.
Jakob Svensson, President of the Nobel Economics Committee, commented: “reducing the enormous income differences between countries is one of the greatest challenges of our time. The winners demonstrated the importance of social institutions to achieve this goal.” The theories developed by the three economists have important implications for the current debate on global inequality. In a world where the gap between rich and poor countries remains significant despite decades of development policies, his work offers new perspectives on how to promote inclusive and sustainable economic growth.
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This Nobel Prize is officially known as the Bank of Sweden Prize for Economic Sciences in memory of Alfred Nobel. It was created in 1968 by the Sveriges Riksbank, the Swedish central bank, on the occasion of its 300th anniversary. Unlike the other Nobel Prizes, it was not provided for in Alfred Nobel’s will, but it has been awarded with the same criteria since 1969.
Who are the winners?
Kamer Daron Acemoğlu was born in Istanbul, Turkey, in 1986. He obtained a bachelor’s degree from the University of York, in the United Kingdom, and later studied a doctorate in Econometrics and Mathematical Economics at the London School of Economics and Political Science (LSE). In 1993 he became a member of the Faculty of the Massachusetts Institute of Technology (MIT). Within academia he is known for his theoretical developments in Political Economy of Growth that encompasses institutional development. and by analysis of supply chains and aggregate production.
Of British-American origin, economist Simon Johnson He was born in 1963. He studied a bachelor’s degree at the University of Oxford and later completed a doctorate at the University of Manchester. In 2023, co-wrote with his colleague Acemoğlu the book Power and Progress (Power and Progress)in which he recounts the historical development of technology and the social and political consequences of it. He is currently a professor of entrepreneurship at the MIT Sloan School of Management, where he also earned a doctorate in economics.
James Alan Robinson He was born in 1960. He is an economist and political scientist from the London School of Economics, a master from the University of Warwick and a doctor from Yale University. In 2004 he became an associate professor of government at Harvard. In 2012 co-wrote the book Why nations fail: The origins of Power, Prosperity and Poverty) together with Acemoğlua work in which they argue that economic growth at the forefront of technology requires political stability.
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Why did they win the Nobel Prize?
The Committee recognized the key contribution of the three economists in identifying the historical roots of current economic disparities between nations, dating back to the colonial period. The works of Acemoglu, Johnson and Robinson start from the confirmation of a paradoxical phenomenon: In some cases, countries that were relatively poor at the time of colonization have become more prosperous in the long term, while some previously wealthy colonies are now worse off economically. The key to understanding this apparent disparity lies in the type of institutions introduced by the colonizers. In territories considered unattractive for European settlement, “extractive institutions” were often created to exploit local resources for the benefit of colonizers. By contrast, where Europeans planned to settle long-term, they were more likely to develop “inclusive institutions,” which guaranteed property rights, the rule of law, and more equitable economic opportunities.
Economists revealed a significant pattern in the institutional development of the former colonies. In territories that initially appeared to offer limited opportunities for immediate economic exploitation, European colonizers were more likely to establish “inclusive institutions.” These structures, characterized by a more equitable distribution of political and economic power, ultimately proved crucial to promoting sustainable and widespread economic development. This model explains why some of the former colonies of North America and Oceania are today among the wealthiest nations in the world, while many resource-rich countries in Africa and South America continue to struggle to achieve similar levels of prosperity.
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Who are the previous winners?
The 2023 Nobel Prize was awarded to Claudia Goldin “for improving understanding of women’s labor market outcomes.” Goldin, a professor of economics at Harvard University, is the first woman to win this category. In 2022, the award goes to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig for his studies on the role of banks in the economy and how bank failures can amplify financial crises.
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In 2021, the prize was split between David Cardfor his empirical contributions to labor economics, and Joshua D. Angrist and Guido W. Imbensfor his methodological contributions to the analysis of causal relationships. Their work has revolutionized the way economists analyze real-world data.
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Nobel week concludes
The awards week began on Monday the 7th with the awarding of the Nobel Prize in Medicine to Victor Ambros and Gary Ruvkun for the discovery of microRNA, followed on Tuesday the 8th, with the Nobel Prize in Physics to John Hopfield and Geoffrey Hinton for machine learning. Subsequently, the Chemistry award went to David Baker, Demis Hassabis and John Jumper for the use of AI in the study of proteins; and the Literature prize awarded yesterday, Thursday the 10th, to the South Korean writer Han Kang. With the presentation of the award corresponding to the Economics category, Nobel Week 2024 comes to an end.
Article originally published in WIRED Italy. Adapted by Alondra Flores.
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