Virendra Pandit
New Delhi: Three economists—Daron Acemoglu, Simon Johnson, and James Robinson—will share the Nobel Prize in Economics for 2024 for their work on differences in prosperity between nations, the media reported on Monday.
The trio will share the cash award of 11 million Swedish kronor (USD 1 million) Nobel Prize for their “studies of how institutions are formed and affect prosperity.”
The Nobel Committee praised the trio for explaining why “societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better.”
“When Europeans colonized large parts of the globe, the institutions in those societies changed,” the committee said, citing the trio’s work. While in many places this was aimed at exploiting the indigenous population, in other places it laid the foundations for inclusive political and economic systems.
“The laureates have shown that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonization,” the committee added.
Countries that developed “inclusive institutions” have become prosperous over time, while those that developed “extractive institutions” have experienced persistently low economic growth.
In their 2012 book “Why Nations Fail,” Acemoglu, a Turkish-American professor at the Massachusetts Institute of Technology, and Robinson, a British professor at the University of Chicago, argue that some nations are wealthier than others because of their political and economic institutions.
The book opens with a comparison of living standards in two towns called Nogales – one in Arizona and one south of the border in Mexico’s Sonora region. Whereas some economists have argued that differences in climate, agriculture, and culture have huge impacts on a place’s prosperity, Acemoglu and Robinson argue that those living in Nogales, Arizona, are healthier and wealthier because of the relative strength of their local institutions.
The Economics Prize is officially known as the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.” Unlike the Nobel Prizes for physics, chemistry, medicine, literature, and peace, it was not instituted by the Swedish industrialist-philanthropist in 1901 but rather by Sweden’s central bank in 1968.
Last year, the prize went to Claudia Goldin, a professor at Harvard University, for her research into women in the labor market.
Using more than 200 years’ worth of US data, Goldin showed how the nature of the gender pay gap has changed over time. Historically, much of the gap could be explained by differences in education and occupation. But in more recent history, she found, the bulk of the gap has been between men and women in the same occupation, and it largely emerges when a woman has her first child.