The Winners of the Nobel Economics Prize 2024
Who was honoured with the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel? In which field of economics was the award granted, and what were their key contributions?
By: Julian Olsen-Pendergast
At 11:45 AM (CEST) on the 14th of October 2024, the three newest Nobel laureates of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel were announced to the world. I tuned in to the YouTube live stream alongside 5,000 fellow economists and journalists. To my great excitement, the award went to Daron Acemoglu, James Robinson, and James Simons for their contributions to economics through their:
“studies of how institutions are formed and affect prosperity.”
These remarkable researchers are the fourth set of Nobel laureates in economic sciences to be recognised in the field of development economics, following the 1979 laureates (T. Schultz & A. Lewis), the 1998 laureate (A. Sen), and the 2019 laureates (A. Banerjee, E. Duflo, & M. Kremer). Coincidentally, there is now a 100% track record of development economist Nobel laureate trios consisting of an MIT duo and a solo UChicago scholar. So, if any development economists are aspiring to become Nobel laureates, my advice is to either work at MIT and publish seminal work with a fellow MIT professor or work at UChicago and collaborate on seminal work with an MIT duo.
I was first introduced to the work of these economists in my final year of undergraduate economics in my development economics course when we covered how history and historical institutions shape the development of economies. Their paper on "The Colonial Origins of Comparative Development (2001)" was an eye-opening empirical study. Their unique approach of finding natural experiments in the history of developing nations has been of great importance to the field of economics.
Their work explores how colonialism shaped the economic trajectories of countries through the institutions that were established. In some colonies, the focus was on extracting resources and exploiting the local population for short-term gain. In others, the colonisers created more inclusive political and economic systems designed to benefit settlers in the long run. These differences in institutional frameworks are a crucial reason why some former colonies prospered while others fell into poverty.
The laureates showed that the introduction of inclusive institutions, often in countries that were poor at the time of colonisation, fostered long-term growth and prosperity. Meanwhile, extractive institutions—focused on enriching those in power—trapped many nations in cycles of stagnation and inequality. According to Acemoglu and Robinson, while inclusive reforms could bring widespread benefits, those in power resist change to maintain their grip on resources and authority, making genuine reform difficult without external pressures.
Interestingly, this inability to credibly promise reform can sometimes be a catalyst for democratisation. When faced with the threat of revolution, those in power may find that transferring power and establishing democratic systems is the only way to maintain stability. As the Nobel Committee Chair Jakob Svensson emphasised,
"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."
By revealing how deeply intertwined institutions are with economic outcomes, Acemoglu, Robinson, and Simons have contributed immensely to our understanding of global development.
Watch a video on the topic at:
