Acemoglu, Johnson, Robinson Awarded 2024 Economics Nobel Prize
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Daron Acemoglu, Simon Johnson and James A. Robinson were awarded the Nobel Prize in economics for research into how institutions are formed and affect prosperity.
The three economists will share an 11 million-krona ($1.1 million) award, the Royal Swedish Academy of Sciences in Stockholm said in a statement Monday.
The award, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968 by the Swedish central bank. It complements annual prizes for achievements in physics, chemistry, medicine, literature, and peace, which were established in the will of Alfred Nobel — the Swedish inventor of dynamite who died in 1896.
Last year, Claudia Goldin received the accolade for her research into gender pay gaps, and the year before, former Federal Reserve Chairman Ben Bernanke shared the award with Douglas Diamond and Philip Dybvig for research on banks and financial crises. Other laureates include Friedrich Hayek for work in the theory of money and economic fluctuations, William Nordhaus for integrating climate change into long-run macroeconomic analysis and Paul Krugman for his analysis of world trade.
The Nobel committee has put the spotlight back on global inequalities. Bestowing its prestigious economics prize on Daron Acemoglu, opens new tab, Simon Johnson, opens new tab and James A. Robinson, opens new tab is a reminder that income disparities among and within nations are just as important as climate change, the AI “revolution” and ageing societies.
It is a much-needed wake-up call. The wealthiest 20% of the world’s countries are now around 30 times richer than the poorest 20%, the Royal Swedish Academy of Sciences noted. And the gap is persisting even though poor countries have become richer.
The newly minted Nobel winners have provided compelling evidence of why inequalities among nations arise and persist. Their findings, detailed, opens new tab in “Why Nations Fail”, the 2012 book by Acemoglu and Robinson, is that institutions and politics are key.
The book’s conclusions – backed up by impressive empirical evidence ranging from ancient Rome to modern-day Nogales, a city split between Arizona and Mexico – is that “inclusive institutions” make countries richer. Democracy, the rule of law and the protection of property rights distinguish those systems from “extractive” arrangements where a small ruling class owns most resources and wealth.
At a global level, these extractive systems are alive and well. The poorest half of the world’s population owned just 2% of global wealth in 2021 while the richest 10% controlled 76% of it, according, opens new tab to the World Inequality Report. Admittedly, the gap between average incomes in the richest 10% of countries and those in the poorest 50% has dropped from more than 50 times in 1980 to less than 40 recently, but it is still huge. And inequality within countries has almost doubled in the same period.
A bar chart showing the portions of wealth and income held by different income groups
Acemoglu, who like Johnson teaches at the Massachusetts Institute of Technology, and Robinson, who is a professor at the University of Chicago, have had some trouble explaining why some countries with less-than-democratic systems, like Singapore and China, have become much wealthier. Nevertheless, their Nobel prize will refocus attention on an issue that risks taking a back seat to other global challenges – like the fight against climate change and the developed world’s demographic time bomb – and fascinations such as the rise of AI, which Acemoglu has criticised, opens new tab.
But their award is important for another reason. Next month’s U.S. presidential election could strain some of the democratic foundations of the world’s largest economy. All the more timely, then, for the Nobel committee to reward research that underscores the importance of robust institutions.
Daron Acemoglu, Simon Johnson and James Robinson won the 2024 Nobel economics prize “for studies of how institutions are formed and affect prosperity”, the Royal Swedish Academy of Sciences said on Oct. 14.
The prestigious award is the final prize to be given out this year and is worth 11 million Swedish crowns ($1.1 million). “Reducing the vast differences in income between countries is one of our time’s greatest challenges. The laureates have demonstrated the importance of societal institutions for achieving this,” said Jakob Svensson, chair of the Committee for the Prize in Economic Sciences.
The introduction of more inclusive institutions, less extraction and the rule of law would create long-term benefits. So why don’t the elite simply replace the existing economic system?
The laureates’ model for explaining the circumstances under which political institutions are… pic.twitter.com/oPCbMndkQM
The richest 20 per cent of the world’s countries are now around 30 times richer than the poorest 20 per cent. The income gap between the richest and poorest countries is also persistent; although the poorest countries have become richer, they are not catching up with the most… pic.twitter.com/FIh56HB9Lk
