Nobel economics prize awarded to 3 researchers

Their work helps to better explain how new ideas and inventions occur.

- KOSTYA MANENKOV, CHRISTOPHER RUGABER, MIKE CORDER AND DAVID MCHUGH

THE RECIPIENTS of the economics prize are announced Monday in Stockholm.

(Anders Wiklund TT News Agency)

Joel Mokyr, Philippe Aghion and Peter Howitt were awarded the Nobel memorial prize in economics Monday for explaining how innovation creates new products and promotes economic growth and human welfare even as it leaves old businesses in the dust.

Their work was credited with helping economists better understand how new ideas and inventions come about — a process as old as steam locomotives replacing horse-drawn transport and as contemporary as e-commerce shuttering shopping malls.

Dutch-born Mokyr, 79, is at Northwestern University; Aghion, 69, at the College de France and the London School of Economics; and Canadian-born Howitt, 79, at Brown University.

A process known as creative destruction

The award recipients were credited with better explaining and quantifying “creative destruction,” a key concept in economics that refers to the process in which beneficial new innovations replace — and thus destroy — older technologies and businesses.

The concept is usually associated with economist Joseph Schumpeter, who outlined it in his 1942 book “Capitalism, Socialism and Democracy.” Schumpeter called the concept “the essential fact about capitalism.”

The Nobel committee said Mokyr “demonstrated that if innovations are 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.”

Aghion and Howitt studied the mechanisms behind sustained growth, including in a 1992 article in which they constructed a complex mathematical model for creative destruction that added new aspects not included in earlier models.