Here’s why Joel Mokyr, Philippe Aghion, and Peter Howitt won the 2025 Nobel Prize in Economics—and what their most significant achievements were.
Why did they win?
Aghion, along with Peter Howitt, won the award “for the theory of sustained growth through creative destruction,” and with Joel Mokyr, they share the award for “explaining innovation-driven economic growth.”
Their work has made it possible to understand how technological innovations—new products, methods, ideas—not only generate progress, but also continuously transform the market: the new replaces the old, the efficient displaces the obsolete. This cycle, although “destructive” for the old, is “creative” in its transformative potential: it drives progress, productivity, and general well-being.
What did they contribute specifically?
• In 1992, they published a seminal article in which they formalized the process of “creative destruction” in a mathematical model—the so-called Aghion–Howitt model—each innovation involves a renewal of technology, companies, and productive structures. Thus, they transformed a theoretical idea into a rigorous framework for analysis.
• This model has served as the basis for decades of subsequent research: it not only explains why economies grow steadily, but also analyzes real impacts on companies, employment, inequality, innovation, and the ability of societies to adapt to technological change.
• Thanks to their work, many economists and policymakers have come to understand that modern economic growth—which has lifted millions of people out of poverty—depends on maintaining a constant flow of innovation, competition, productive renewal, and institutional structures that enable these processes.
Its current relevance
In a world in constant transformation—technology, artificial intelligence, energy, globalization—Aghion’s ideas are more important than ever: they help us understand why some societies stagnate and others advance, and they guide public policy toward investment in innovation, open competition, education, and research.
A story that arouses curiosity and admiration because his wife Beatriz typed his paper for him, since he wrote by hand and cut out pieces with scissors when he made corrections!
“The man who discovered that progress… begins by breaking things.”
(Philippe Aghion’s storytelling to explain his Nobel Prize)
They say that great discoveries are born from a simple question.
Philippe Aghion’s was almost childish:
“Why do some nations advance… and others get stuck?”
While many economists repeated old recipes—save, invest, produce—Aghion looked around and saw another truth:
The world was changing too fast to be explained by formulas from the last century.
One day, watching how a new technology was replacing another—how a smartphone wiped out the old cell phone, how Netflix buried the DVD, how clean energy was beginning to dethrone oil—he had a flash of insight:
“Here is the secret of growth!
The future is born when the new dares to replace the old.”
He called this revelation creative destruction.
It sounds dramatic… and it is.
Because Aghion dared to say what no one wanted to hear:
For a society to move forward, something has to die:
An idea, a machine, an old way of working.
Only then does the best emerge.
Together with Peter Howitt, he took that intuition and turned it into a brilliant model that is now taught around the world.
He showed that innovation is not a luxury but the real engine that drives countries forward.
Aghion explained something even more profound:
• That every invention brings new opportunities…
• …but also discomfort, resistance, and fear.
• However, it is this cycle of rebirth that lifts entire economies.
In other words:
We move forward because we dare to change.
That is why he was awarded the Nobel Prize in 2025.
Because he not only explained how an economy grows…
He explained how a world grows.
And, unwittingly, he left us with a lesson that does not appear in any mathematical model:
Life—like societies—flourish when we let go of what no longer serves us…
to make room for what does.
SEPGRA Economic Analysis Group
Further Reading (and more):