Nobel Prize in Economics awarded to Daron Acemoglu, Simon Johnson and James Robinson

The Nobel Prize in Economics 2024 has been awarded toDaron Acemoglu, Simon Johnson and James A. Robinson for demonstrating the importance ofsocietal institutions for a country’s prosperity, theRoyal Swedish Academy of Sciences announced on Monday (Oct 14).

“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 three laureates will be equally sharing a cash prize of 11 million Swedish kronor ($1.1 million), whichwill be awarded on December 10.

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Notably, Acemoglu and Johnson are professors at theMassachusetts Institute of Technology, Cambridge, USA, while Robinson is currently teaching at the University of Chicago.

What was their research?

The winners pioneered a new approach to provide credible, quantitative answers to economic disparity among the rich and the poor across the globe.

Notably, the richest 20 per cent of countries are around 30 timeswealthier than the poorest 20 per cent of countries. The income gaps across countries have been highly persistent over the past 75 years, with data showing that between-country disparities in income have grown over the past 200 years.

The research by the trio empirically examines the impact and persistence of colonial strategies on subsequent economic development.Their research centres on the idea that political institutions fundamentally shape the wealth of nations.

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Acemoglu and Robinson developed a dynamic model by integratingexisting political science theories on democratic reform into a game-theoretic framework. Under this dynamic model, theruling elite make strategic decisions about political institutions – particularly whether to extend the electoral franchise – in response to periodic threats.

This framework is now standard for analysing political institutional reform and has significantly impacted the research literature. And evidence is mounting in support of one of the model's core implications: more inclusive governments promote economic development.

The Academy stated that the trio have "notonly shaped our understanding of the root causes behind why countries fail, but they have also pioneered new methodologies for studying these issues".

Although their contributions do not provide a concerted answer on why some countries remain trapped in poverty, it still represents a major leap forward in the pursuit of understanding the issue.

(With inputs from agencies)