The 2025 Economics Nobel Prize

 



The 2025 Nobel prize for econonmics has been awarded to three indaviduals, Philippe Aghion, Peter Howitt and Joel Mokyr, who have, over decades, attempted to explain humanity's unprecedented progress over the past two centuries. There work not only is incredibly relevant to the current AI technological replacement of labour but extremely relevant to the Y13 micro course, especially with some of the content that we are covering in class at the moment.





What enabled technological to compound on itself so rapidly?
  • Pre-industrial period, there was alot of knowledge on HOW things work, how to produce steel and other products, but not WHY.
  • This was more of a trial and error approach, and hence why investment in technologies was quite low.
  • Advancements were made in terms of the "HOW?"

Innovation and the impact on economic growth?

  • Economic policy such as the through patents improved growth as innovators are somewhat protected
  • In the past, creative destruction may not have been seen as a huge thing. Stagnation was the norm throughout most of human history. Sure there were important economic discoveries here and there. but overall economic growth often just leveled off.
  • This changes after the industrial revolution 
  • Rate of Economic growth is equal to 
    • PRODUCT OF SCALE X FREQUENCY OF INNOVATIONS
  • Not much is also required to invest (apart from capital)

Is this progress good?

  • In the past, we've seen the best growth come from an increase in both theoretical and practical knowledge.
  • An optimist would argue that AI helps with theoretical knowledge
  • A pessimist would say the antithesis, the CREATIVE DESTRUCTION of workers? Could AI steal peoples IP?
  • Do we need to improve social insurrance.

An amazing video, very related to economics at A-level:
https://www.youtube.com/watch?v=u4hZAMp25s4

And here's the summary of their work:
https://www.nobelprize.org/uploads/2025/10/popular-economicsciences2025-3.pdf


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