Nobel Prize for Daron Acemoglu, Simon Johnson, and James Robinson

Many economists had been picking this prize for a few years. Daron Acemoglu (MIT), Simon Johnson (MIT), and James Robinson (University of Chicago) were awarded the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (aka the Nobel Prize in Economics) yesterday, "for studies of how institutions are formed and affect prosperity".

While many, if not most, Nobel Prize winners in economics are largely unknown outside the discipline, having toiled away publishing papers only read by other economists, this award recognises three academics whose key contributions on which the award are based are contained within several best-selling books, including Why Nations Fail (by Acemoglu and Robinson, which I reviewed here), The Narrow Corridor (by Acemoglu and Robinson, which I reviewed here), and Power and Progress (by Acemoglu and Johnson, which I haven't read yet, but it is close to the top of my pile of books to-be-read). The Nobel Prize Committee's citation noted:

The laureates have shown that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonisation. Inclusive institutions were often introduced in countries that were poor when they were colonised, over time resulting in a generally prosperous population. This is an important reason for why former colonies that were once rich are now poor, and vice versa.

Some countries become trapped in a situation with extractive institutions and low economic growth. The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power. As long as the political system guarantees they will remain in control, no one will trust their promises of future economic reforms. According to the laureates, this is why no improvement occurs.

However, this inability to make credible promises of positive change can also explain why democratisation sometimes occurs. When there is a threat of revolution, the people in power face a dilemma. They would prefer to remain in power and try to placate the masses by promising economic reforms, but the population are unlikely to believe that they will not return to the old system as soon as the situation settles down. In the end, the only option may be to transfer power and establish democracy.

Notice that citation really is the theme across their three books. Of course, there is an academic base that those books are founded on as well, and which no doubt contributed to their prize. Alex Tabarrok at Marginal Revolution gives a good summary of their work, as does John Hawkins at The Conversation. As those two posts make clear, all three prize winners have made contributions beyond those in the citation.

However, Acemoglu is clearly a standout performer, and has been for a long time. He is one of the most cited economists in the world, with contributions across a number of areas. Tabarrok points to joint work between Acemoglu and pascual Restrepo on technological change. I have on my list of interesting ideas to go back and look at a different paper by Acemoglu and Restrepo, on the impacts of population ageing on economic growth, but using different measures of population ageing (as in my article here). I also pointed to Acemoglu's views on the impact of generative AI on inequality yesterday, which he has also researched recently.

In my ECONS102 class, I've been including more of a focus on economic and political institutions over time, and this prize may prompt me to even include a bit more (or at least, to point more explicitly to the work of Acemoglu, Johnson, and Robinson). And hopefully it will encourage even more people to read their books.