Nobel economics prize goes to 3 researchers for explaining innovation-driven economic growth

STOCKHOLM (AP) — Three researchers who probed the process of business innovation won the Nobel memorial prize in economics Monday for explaining how new products and inventions promote economic growth and human welfare, even as they leave older companies in the dust.

Their work was credited with helping economists better understand how ideas and technology succeed by disrupting established ways — a process as old as steam locomotives replacing horse-drawn wagons and as contemporary as e-commerce shuttering shopping malls.

The award was shared by Dutch-born Joel Mokyr, 79, who is at Northwestern University; Philippe Aghion, 69, who works at the Collège de France and the London School of Economics; and Canadian-born Peter Howitt, 79, who is at Brown University.

The winners were credited with better explaining and quantifying “creative destruction,” a key concept in economics that refers to the process by which new innovations replace older technologies and businesses.

The concept is usually associated with economist Joseph Schumpeter, who outlined it in his 1942 book “Capitalism, Socialism and Democracy.” Schumpeter called the concept “the essential fact about capitalism.”

The Nobel committee said Mokyr “demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why.”

Aghion and Howitt studied the mechanisms behind sustained growth, including in a 1992 article that offered a complex mathematical model for creative destruction that added new aspects not included in earlier models.

Examples of creative destruction include e-commerce disrupting retail, streaming services replacing videocassette and DVD rentals and internet advertising undermining newspaper advertising. A classic illustration is horse-cart whip makers put out of business by the automobile.

“The laureates’ work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underlie creative destruction, so that we do not fall back into stagnation,” said John Hassler, chair of the committee for the prize in economic sciences.

Howitt and Aghion’s model showed that markets with too few dominant companies can hinder innovation and growth — a concern that has been raised about industries such as telecommunications, social media platforms and airlines.

They found it was important to support people who are affected by changes while making it easy to move to more productive workplaces — to protect workers more than specific jobs. They also stressed the importance of social mobility, where a person's profession or trade is not defined by their parents' identity.

Mokyr has long been known as an optimist about technological innovation. About a decade ago, many economists took a more pessimistic view, arguing that inventions such as smartphones or even the internet had less of an economic impact than previous developments such as the airplane or the car.

Mokyr responded that because many new services were either cheap or free, their impact wasn’t evident in economic data, but they still provided enormous benefits.

In an interview with The Associated Press in 2015, he cited the music streaming service Spotify as an example of an “absolutely astonishing” innovation that economists had difficulty measuring. Mokyr noted he once owned more than 1,000 CDs and many vinyl records, but now he could access a huge music library for a small monthly fee.

He acknowledged that new inventions often cause at least short-term job loss or reduced earnings for workers. Like many economists, he argued that innovations also created unexpected jobs that offered fresh opportunities.

The Nobel committee noted that for much of human history, economic stagnation, rather than growth, was the norm. Starting with the Industrial Revolution in the 18th century, European and later other economies began to grow.

Innovation — and how to foster it — is an urgent question in Europe, where a report by former European Central Bank head Mario Draghi argued that Europe faces a rising productivity gap with the U.S. in digital technology. Aghion said the challenge was for Europe to keep pace with the U.S. and China in innovation by promoting research and the venture capital financing to turn ideas into businesses.

“We have to wake up," he told AP. "Because you know who will win in this competition? Those who innovate.”

Aghion said he believes artificial intelligence has “huge growth potential, but it all depends on the institutions and policies we put in place.” He said policies need to foster competition because big actors already in the sector know how to manage regulations, and that may discourage new entrants.

Mokyr said the notion that AI is a “monstrosity” that will drive humans into extinction comes from “people who have read too much dystopian fiction. Nothing of the sort is ever going to happen.”

Instead, he said at a news conference at Northwestern that he views it “primarily as a magnificent research assistant” that can gather and process information quickly.

He also disputed the notion that machines replace people. “They move us to more interesting, more challenging work," he said.

Mokyr said he awoke around 5 a.m. and opened his laptop to find multiple congratulatory messages, which confused him. He checked his phone and saw a message from a Swedish number. He called it and was told he won the prize.

“I think I sat there for 15 minutes, sort of dazed,” he told AP in an interview at his home in Skokie, Illinois. He will turn 80 next summer but said he has no plans to retire.

“This is the type of job that I dreamed about my entire life,” he said.

Howitt said he discovered he had won the Nobel prize when a Swedish reporter called him as he was waking up. At first, he thought it was a hoax.

“We had no Champagne in the refrigerator. We were not anticipating this,” he joked with reporters.

Aghion said the Nobel committee did not have his co-winners’ contact information, so they asked him for it.

"It’s really the dream prize, with the people I dreamed of getting it with,” Aghion said.

One half of the 11 million Swedish kronor (nearly $1.2 million) prize goes to Mokyr, and the other half is shared by Aghion and Howitt. Winners also receive an 18-carat gold medal and a diploma.

The economics prize is formally known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. The central bank established it in 1968 as a memorial to Nobel, the 19th-century Swedish businessman and chemist who invented dynamite and established the five Nobel Prizes.

Since then, it has been awarded 57 times to a total of 99 laureates. Only three of the winners have been women.

Nobel purists stress that the economics prize is technically not a Nobel Prize, but it is always presented together with the others on Dec. 10, the anniversary of Nobel’s death in 1896.

Nobel honors were announced last week in medicine, physics, chemistry, literature and peace.

McHugh reported from Frankfurt, Germany. Rugaber reported from Washington and Corder from The Hague, Netherlands. Associated Press journalists John Leicester and Oleg Cetinic in Paris, Laura Bargfeld in Skokie, Illinois, and Kimberlee Kruesi in Providence, Rhode Island, contributed to this report.

Joel Mokyr poses for a photo at his home, Monday, Oct. 13, 2025, in Skokie, Ill., after winning the Nobel prize in economics. (AP Photo/Nam Y. Huh)

Joel Mokyr after winning the Nobel prize in economics, Monday, Oct. 13, 2025, in Skokie, Ill. (AP Photo/Nam Y. Huh)

France's Philippe Aghion reacts before an interview with the Associated Press after winning the Nobel prize in economics, Monday, Oct. 13, 2025 in Paris. (AP Photo/Thibault Camus)

France's Philippe Aghion smiles before an interview with the Associated Press after winning the Nobel prize in economics Monday, Oct. 13, 2025 in Paris. (AP Photo/Thibault Camus)

Professor John Hassler, from left, Hans Ellegren, Permanent Secretary of the Academy of Sciences and Professor Kerstin Enflo, announce Joel Mokyr, Philippe Aghion and Peter Howitt as the recipients of the Nobel Memorial Prize in Economics during a press conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden, Monday, Oct. 13, 2025. (Anders Wiklund/TT News Agency via AP)

Professor John Hassler, from left, Hans Ellegren, Permanent Secretary of the Academy of Sciences and Professor Kerstin Enflo, announce Joel Mokyr, Philippe Aghion and Peter Howitt as the recipients of the Nobel Memorial Prize in Economics during a press conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden, Monday, Oct. 13, 2025. (Anders Wiklund/TT News Agency via AP)

Joel Mokyr, from left, Philippe Aghion and Peter Howitt (on screen) announced as the recipients of the Nobel Memorial Prize in Economics during a press conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden, Monday, Oct. 13, 2025. (Anders Wiklund/TT News Agency via AP)

Professor John Hassler, from left, Hans Ellegren, Permanent Secretary of the Academy of Sciences and Professor Kerstin Enflo, announce Joel Mokyr, Philippe Aghion and Peter Howitt as the recipients the Nobel Memorial Prize in Economics during a press conference at the Royal Swedish Academy of Sciences in Stockholm, Sweden, Monday, Oct. 13, 2025. (Anders Wiklund/TT News Agency via AP)

FILE - French economist Philippe Aghion attends a round table discussion on the 'The future of European competitiveness' at the College de France in Paris, France, Wednesday, Nov. 13 2024. (Teresa Suarez, Pool via AP, File)

FILE - A Nobel Prize medal is displayed before a ceremony at the Swedish Ambassador's Residence in London, Monday, Dec. 6, 2021. (AP Photo/Matt Dunham, File)

MELBOURNE, Australia (AP) — Rasmus Neergaard-Petersen won the Australian Open for his first major professional title Sunday when his scrambled par on the final hole crushed the hopes of hometown favorite Cam Smith who was chasing his first win in more than two years.

Smith and Neergaard-Peterson came to the 72nd hole tied at 15-under after a thrilling contest over the last nine holes. Neergaard Petersen shanked his drive into difficult rough on the right with a bunker between his ball and the green.

Smith found the green with his second but with a long, sloping putt to the hole. Matter of fact as he has been throughout the week, Neergaard got up and down for par while Smith missed his difficult putt for birdie, then a 1.5 meter return putt to force a playoff.

The 26-year-old Danish player won by a single shot at 15-under 269 after rounds of 67, 66, 66 and 70. Smith started the last round two shots behind the leader, drew level by the turn and led outright after sinking a three meter put for birdie on the 10th hole.

After a birdie at the 11th, Smith bogeyed the 12th and was level with Neergaard-Petersen at 13 under. The pair stayed locked together until the final hole when Smith's missed par putt handled his opponent a career-changing victory.

“It’s hard. I’m really at a loss for words. It’s been a battle all day,” Neergaard said. “Even from the outside, you can look calm but it was a storm inside (for me) all day.

“But I managed to keep battling and to get it up and down to make that putt on the last. I don’t know what to say, to be honest.”.

Smith, the 2022 British Open champion who ended his streak of missing seven consecutive cuts this year on Friday, shot 66 Saturday and was tied for second, two strokes off the lead.

After all his missed cuts, Smith, said that it was “nice being in contention” entering the final round.

“It’s been a while since I’ve had this feeling to be honest,” he said. “I love that it’s the Australian Open. I couldn’t think of a better place to get back into form. It would shut a few people up.”

Smith has won the Australian PGA twice but has yet to win the Stonehaven Cup as the champion of his national open.

His last tournament victory came at the LIV tournament in Bedminster, England in August 2022 and his previous top-10 finish was in July.

Rory McIlroy's 11 bogeys over four days, including an unfortunate encounter with a banana peel on Saturday, kept him out of contention. On Sunday, the Northern Irishman had a final round 69, with five birdies and three bogeys, to finish in a tie for 10th.

McIlroy, the Race to Dubai winner and who completed his career Grand Slam when he won the Masters this year, was naking his first appearance at the Australian Open since 2015. He won it in 2013.

Speaking after his final round Sunday, the world No. 2 called for a more favorable schedule to attract more of the game's top players.

While he thought the sandbelt courses held massive appeal, the scheduling didn’t help the tournament attract the top overseas players.

“I obviously would love to have a few more players come down and play, but it’s hard with three tournaments going on in the schedule this week,” said McIlroy referring to the schedule clash with Tiger Woods’ Hero World Challenge in the Bahamas and the DP World Tour’s Nedbank Challenge in South Africa.

"There need to be conversations had with people much more important than me that set the schedules, and hopefully the Australian Open can find a date that accommodates everyone and everyone can at least have the option to come down.”

“People seeing the scenes here on TV…it’ll definitely pique their interest,” he said.

The winner of the Australian Open, which is the second event on the European tour’s new schedule of tournaments for late this year and 2026, receives a Masters exemption next year. And the top three finishers not already exempt — Michael Hollick, Adam Scott and Si Woo Kim — have qualified for the British Open in 2026 at Royal Birkdale.

AP golf: https://apnews.com/hub/golf

Rory McIlroy of Northern Ireland, left, speaks to Matt McCarty of the U.S., right, during the fourth round of the Australian Open golf tournament in Melbourne, Australia, Sunday, Dec. 7, 2025. (AP Photo/Asanka Brendon Ratnayake)

Australia's Cameron Smith watched his putt on the 14th during the final round of the Australian Open golf tournament in Melbourne, Australia, Sunday, Dec. 7, 2025. (AP Photo/Asanka Brendon Ratnayake)

Denmark's Rasmus Neergaard-Petersen, left, plays from the rough on the 18th green as his caddy Brian Nilsson watches during the final round of the Australian Open golf tournament in Melbourne, Australia, Sunday, Dec. 7, 2025. (AP Photo/Asanka Brendon Ratnayake)

Denmark's Rasmus Neergaard-Petersen celebrates after sinking his putt on the 18th during the final round of the Australian Open golf tournament in Melbourne, Australia, Sunday, Dec. 7, 2025. (AP Photo/Asanka Brendon Ratnayake)

Denmark's Rasmus Neergaard-Petersen holds the Stonehaven Cup after winning the Australian Open golf tournament in Melbourne, Australia, Sunday, Dec. 7, 2025. (AP Photo/Asanka Brendon Ratnayake)