The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024
Press release
English
English (pdf)
Swedish
Swedish (pdf)
14 October 2024
The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 to
Daron Acemoglu
Massachusetts Institute of Technology, Cambridge, USA
Simon Johnson
Massachusetts Institute of Technology, Cambridge, USA
James A. Robinson
University of Chicago, IL, USA
“for studies of how institutions are formed and affect prosperity”
They have helped us understand differences in prosperity between nations
This year’s laureates in the economic sciences – Daron Acemoglu, Simon Johnson and James Robinson – have demonstrated the importance of societal institutions for a country’s prosperity. Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better. The laureates’ research helps us understand why.
When Europeans colonized large parts of the globe, the institutions in those societies changed. This was sometimes dramatic, but did not occur in the same way everywhere. In some places the aim was to exploit the indigenous population and extract resources for the colonizers’ benefit. In others, the colonisers formed inclusive political and economic systems for the long-term benefit of European migrants.
The laureates have shown that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonization. Inclusive institutions were often introduced in countries that were poor when they were colonized, 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 democratization 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.
“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,” says Jakob Svensson, Chair of the Committee for the Prize in Economic Sciences.
Illustrations
The illustrations are free to use for non-commercial purposes. Attribute ”© Johan Jarnestad/The Royal Swedish Academy of Sciences”
Illustration: The Prize in Economic Sciences 2024 (pdf)
Illustration: Income gap (pdf)
Illustration: Reversal of fortune (pdf)
Illustration: Theoretical framework for how political institutions are shaped and changed (pdf)
Read more about this year’s prize
Popular science background: They provided an explanation for why some countries are rich and others poor (pdf)
Scientific background to the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 (pdf)
Daron Acemoglu, born 1967 in Istanbul, Türkiye. PhD 1992 from London School of Economics and Political Science, UK. Professor at Massachusetts Institute of Technology, Cambridge, USA.
Simon Johnson, born 1963 in Sheffield, UK. PhD 1989 from Massachusetts Institute of Technology, Cambridge, USA. Professor at Massachusetts Institute of Technology, Cambridge, USA.
James A. Robinson, born 1960. PhD 1993 from Yale University, New Haven, CT, USA. Professor at University of Chicago, IL, USA.
Prize amount: 11 million Swedish kronor, to be shared equally between the laureates.
Further information: www.kva.se and www.nobelprize.org
Press contact: Eva Nevelius, Press Secretary, +46 70 878 67 63, eva.nevelius@kva.se
Experts: Tommy Andersson, +46 73 358 26 54, tommy.andersson@nek.lu.se, Peter Fredriksson, +46 76 806 70 80, peter.fredriksson@nek.uu.se, Jakob Svensson, +46 70 177 67 17, jakob.svensson@iies.su.se and Jan Teorell, +46 70 868 18 91, jan.teorell@statsvet.su.se, members of the Committee for the Prize in Economic Sciences in Memory of Alfred Nobel.
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