Nobel Prize Conversations

They showed how new technology can drive sustained growth

Listen to the 2025 economic sciences laureates talk about their Nobel Prize-awarded work and life learnings in this podcast conversation with Adam Smith.

Podcast transcript

Philippe Aghion: Why did I want to do economics? To influence thinking, but well beyond the profession. Of course, I want to have disciples and to have people doing research on creative disruption and they are very talented young researchers that keep up with the agenda. But I wanted, beyond economic scholars, to have an influence on how people think.

Adam Smith: Well, there you hear Philip Aghion and he certainly achieved his ambition having his work talked about beyond economics by choosing the drivers of sustained growth to work on. Something that politicians the world around are excited by. He of course was awarded the 2025 prize in economic sciences along with his collaborator Peter Howitt and with Joel Mokyr. And what an entertaining bunch they turn out to be.

Karin Svensson: I’d love to sit down with them for dinner all three of them. Such different temperaments.

Smith: Yeah, indeed. And three very different personalities. They illustrating the point that no three economists are alike.

Svensson: You’re listening to Novel Prize conversations and my name is Karin Svensson.

Smith: And mine is Adam Smith.

Svensson: And this podcast was produced in cooperation with Fundacion Ramon Areces. So let’s kick this off with our first introduction.

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Svensson: Peter Howitt grew up in Ontario, Canada. As a teenager, he struggled in school, but a part-time job at a woolbroker awakened his interest in the intricacies of economics. In 1988, he was a visiting professor at the Massachusetts Institute of Technology where he befriended a young French economist named Philippe Aghion, a friendship that would lead to groundbreaking research and eventually the prize in economic sciences.

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Smith: When we spoke in October on the day of your prize announcement, you rather memorably said, I recall, “This announcement for me personally means that my future holds less golf and more economics.” I’m imagining that is very much proved to be the case.

Howitt: It certainly has, yes. My golf has suffered.

Smith: Unusually, I suppose, you took early retirement. And I say unusually because when I think of laureates in general, I think that’s a less usual path. That was, I think, 12 years ago. Why did you decide to take early retirement from Brown? Obviously being a hugely successful and at the top of your game and all the rest of it, or maybe it’s about being at the top of your game. Tell me.

Howitt: Well, I’m not sure that I was at the top of my game anymore. I think it would be different if I were an economic historian or if I were in some other field. But the kind of economics that I did was theoretical, fairly mathematical, and that’s really not an area where many people make a lot of contributions in their 70s and their 80s. And I had some health problems. I had a small heart attack, which surprised me because I was living what I though was a healthy lifestyle. I was exercising. I wasn’t overweight. I was eating good food, mostly a plant-based diet. And I decided, well, I was putting too much stress on myself. I was trying to keep up with the younger people in my field, enjoying the challenge and everything, but it was putting a lot of stress on me and it wasn’t good for my health. So I though about it for a long time and decided that I’m not going to be sacrificing a lot of major contributions if I retire now and maybe it’s time to open a new chapter in my life. So that’s what I did.

Smith: So is it the case that a bit like mathematicians, mathematical economists tend to make the greatest contributions when they’re really quite young?

Howitt: That’s true.

Smith: Interesting. Have you found, though, that the announcement last October has hurled you back in a way?

Howitt: Well, it certainly has, but in a different way. I mean, I’m going back now and I guess I’m looking on what I had done for the past 40 years with a bit more reflection and somewhat different perspective than I had before. And I find myself preparing talks focused much less on the more technical aspects of what I had done, which is what I was used to doing all my career and more on the broader social impact. It’s been very interesting. It’s been challenging also, but I’ve really enjoyed the chance to reflect more broadly on what I had done and why it matters.

Smith: What turned you onto economics in the first place?

Howitt: It was as a teenager, I was still in high school. It was just a part-time job after school and on weekends. And then for a couple of summers, I had this job with a wool broker who imported wool from all around the world, particularly from South America, Australia, New Zealand, South Africa, and sold it to textile mills in Ontario tech.

Smith: How come you, as a teenager, found yourself working for a wool broker? It’s not quite like working in the pizza restaurant or whatever.

Howitt: He was a friend of the family and I was a somewhat troubled teenager. I was not a good student in high school. And he was really doing the family a favour. It was a very small business. He had two full-time employees, a secretary and an assistant who understood the wool business very well. He hired me to take care of his samples and answer a couple of routine telegrams and tidy up here and there. I don’t think I added anything to the bottom line. But I thought, “Okay, well, this will provide me with a little bit of spending money.” And then I really got into it. I mean, he was a wonderful person, very engaging, very enthusiastic. He took me under his wing as a mentor. And it was a big part of growing up for me. And I was just very excited about what he did. He would take me on sales trips to the eastern provinces of Quebec where he would visit textile mills and take some of his clients out for dinner and he would just invite me to come along with him. I was fascinated by all of the prices that would come in on his teletype machine and keep changing all the time. And I realised this was really important because he had to buy things at just the right price or he was not going to make money and his family was going to suffer. And I just asked him, like, “Why are they going up and down like this? What’s going on? Why can’t everybody agree on a price?” And he gave me a lecture on supply and demand, which I kind of understood. And he was the one who said, “Well, you know, if you really wanna understand this, you should go study economics.”

Smith: People talk a lot about mentorship and they often focus on mentors who are more part of the system, your teachers or your professors at university. In this case, it’s just somebody sort of putting a guiding hand on you and giving you the opportunity to flourish quietly on your own.

Howitt: Yes, very much.

Smith: And also recognising obviously your innate curiosity. I think a lot of people might not notice the price fluctuations or be excited by the moods.

Howitt: Yeah. And ever since then, I’ve tried to be largely guided by my curiosity. We’re not worried too much about how practical things are, but especially if you’re an academic, following your own curiosity is a good strategy and it’s been very fulfilling.

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Svensson: Born in France to Egyptian parents, Philippe Aghion came to economics as a mathematician with a desire to make the world a better place. Together with Peter Howitt, he developed the modern mathematical theory of creative destruction to explain how innovation drives long-term prosperity. He speaks to Adam from his beautiful Paris apartment filled with surialist art.

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Smith: I know that your parents were very artistic. And I don’t know if the beauty of your apartment is a direct result of parental influence, but –

Aghion: No, no, no. Absolutely. It owes everything, particularly to my father. My father was an art dealer and he was very close to the surrealist movement. So all what I have in my flat has been chosen by my father or exhibited by my father. I mean, there used to be much more but anything I have in my flat is, I didn’t purchase a single thing which is in my apartment myself. It owes everything to my parents, particularly to my father.

Smith: Well, that makes it all very special. Gosh. Did you think of following in your father’s trade of being a dealer?

Aghion: No, never. In fact, my father didn’t want that. My father didn’t choose to be an art dealer to begin with. He wanted to go into politics. My father was a communist activist in Egypt and created a communist party. Then came to France, was closer to the surrealism movement and created a newspaper called Middle East Arion. He was always an activist until he was banned from France, he was expelled. Then he was allowed back to France in 1956 on condition that he would not do any politics anymore. So art dealer for him was a fallback. He didn’t plan initially to be an art dealer. He became an art dealer as a fallback option.

Smith: Gosh, 1956, what was his feeling about what happened to Egypt having created the Communist Party there? He must have been disappointed.

Aghion: Oh, very much so. He was. No, but the thing is he came from a rich Jewish family in Alexandria surrounded by poverty. So in 1956, he had mixed feelings because on the one hand, the Farouk regime in Egypt was not ideal for him. He was fighting it. So on the other hand, it’s true that Jews took a toll with the Nasser revolution. Very strangely, he was on the Nasser side at the time. He was more like on the Nasser side, even though he lost everything. That’s very much our family. We are on the side of those who robbed us.

Smith: But revolutionaries were on the side of Nasser, for sure. Yes, of course.

Aghion: Yeah, exactly. And he was rather leaning on that side. My parents migrated to France in 1945. The rest of the family stayed until the Nasser coup. But my parents came to France because they wanted to be close to the French Surrealist movement. There was an Egyptian Surrealist movement and they were close to them and they were part of it. And then they wanted to get close to the French Surrealist movement. And that’s why they came back to France long before the Nasser Revolution.

Smith: And your mother also, very artistic, a fashion designer. Created the company Chloé. That also, I suppose, could have been a way to go for you.

Aghion: That was a way to go. She asked me whether I wanted to co-manage Chloé. And I said, I didn’t want that. I wanted to be a researcher.

Smith: You didn’t want to be a political activist, you wanted to be a researcher.

Aghion: To be totally frank, I came into economics because I was good in math and I was politically motivated. So it’s the mixture of the math and the political motivation that got me into economics, to be totally frank. I wanted to study economics because I could see various politicians articulating a seemingly logical reasoning, getting at opposite conclusions. So I wanted to know how can I find out who is right and who is wrong? So I started to question myself and this, this questioning that led me into becoming an economist. I wanted to make the world a better place. So I said, “Well, I need to learn some economics, maybe to be more operational, to help make the world a better place.” So my coming into economics was largely politically motivated and also the fact that I knew I had done some math and I knew that with math, we have kind of comparative advantage to go into economics.

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Svensson: It’s interesting listening to Howitt and Aghion talk about their different paths into economics.

Smith: Yes, indeed. Philip Aghion had these extremely creative parents and he was good at maths and interested in politics and that drove him on. Peter Howitt as a teenager was working in business on the side and that attracted him. And I suppose what it illustrates is that there’s no particular path. This is very generally true, isn’t it? It’s about finding your question. It’s about something that ignites you. It’s an encouraging message, really, isn’t it? That the path isn’t so important. It’s just having your eye open for what you’re really interested in.

Svensson: And also sort of the people that push you along that path. Having your parents push you or meeting someone who sees something in you and suggests something.

Smith: Yes, indeed. Again, I suppose it’s being open to somebody else’s suggestion. Some lucky people have it all inside already, and so they just kind of fire up on their own. But I think that the majority have been at least prodded in the right direction towards their question by some helpful people along the way who they’ve listened to. But yes, you can’t help but talk about this stuff without thinking about yourself though, can you, Karin, thinking, “Oh, if only I’d listened. If only I’d been open”.

Svensson: That wasn’t our path.

Svensson: A third laureate has an interesting take on the personality that it takes to make a good economist, at least in his case. But before we listen, let’s give him a proper introduction.

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Svensson: Joel Mokyr is an economic historian. In his research, he has focused on the culture of innovation and why the Industrial Revolution became the starting point for sustained economic growth. He was born in the Netherlands, grew up in Israel, and built his academic career in the United States, spending most of his professional life at Northwestern University in Illinois where he met Peter Howitt. Joel Mokyr describes research as the only possible path for him for a very particular reason.

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Mokyr: I was an academic, been an academic all my life, right? I mean, at this university 52 years. So I’ve never had a real job in my life, so to speak. I’ve always been a professor. I never did anything useful. But this is the kind of stuff that I’m good at, not just because I’m a boring teacher or I’m a boring researcher, but because I’m terrible at either giving or following orders. And in a university, you don’t have to, right? It’s a very horizontal structure and that suits me perfectly. I would not have ever been happy in a corporate job or even in a government job in which you have to report to somebody. In a university, you don’t. Somebody once said that tenured university professors are really self-employed people with a secure check at the end of the month. And that is what we are, you know? I mean, I don’t have to worry about my customers and with declining demand or supply chain shocks or anything like that. I get paid whatever I do, but nobody really looks over my shoulder and says, “Do this, ” or, “Why haven’t you delivered?” There are some accounting, of course, in the end. If you’re totally unproductive, somebody will notice and there will be some kind of price to pay. But it’s very indirect and very slow and certainly beyond a certain age, which I certainly am, nobody really expects you to do anything dramatic as long as you show up for classes and the students aren’t in outright rebellion. So, I mean, I’m suited for this kind of work. Now, what the prize does, and in a way, I think this is kind of a bit of an anomaly because it seems there’s lots of prizes and lots of distinctions in my field, you know? And I’ve had a few, I had the Balzan prize 10 years ago and the Heineken prize 20 years ago. But a Nobel really is a different order of magnitude. I think over my entire life, I have not been photographed as much as I have been in the last six months. If they ever discover that taking somebody’s digital photo causes cancer, I’m a dead man. So yeah, I’m suited to this kind of work, perhaps, because I’m not suitable for anything else.

Smith: I like that piece of information that you don’t follow orders. Is that, do you think, part of the secret to your success in choosing the right research questions to be productive?

Mokyr: Well, it clearly is a factor. There are lots of people that I know in academe who are not good at taking orders whose research also isn’t particularly earth-shaking, okay? So you need more than that. One possibility is that you need somebody who is accustomed to think outside the box, so to speak. So look at a subject on which others have written, on which there is a lot of research, look at it and say, “You know what? I think this is all wrong. I’m going to try this on my own and do something novel that isn’t stupid. That’s an addition to not following order. But a lot of people, I think almost all of my colleagues, I think, as I look at my two departments, most of the people that I know there aren’t very good at following orders. It’s not true for everybody. Some of them probably are more suitable for some kind of more hierarchical structure. And they end up, not surprisingly, in administrative positions, deans and provosts and so forth. That would not suit me at all. I was department chair for three years because that is part of the job, but it’s a rotational thing. But after that, I get extremely itchy during committee meetings.

Smith: So was it also a natural choice for you to move into economics and history, or was that something you had to find your way to?

Mokyr: It was a certain amount of contingency there. The way it happened was that when I enrolled at the Hebrew University in Israel in the mid – 1960s, the system was that you had to take a double major. I know many American universities that have that system, but we had it in Israel at the time. You had to major in two departments. So I knew I wanted to do history because history has always been my great love. But I say, “Oh, you did another major.” And I go, “Well, you know, what should I do? ” And somebody said, “Well, try economics.” I did one course of economics in high school, but I didn’t know very much about it. And I signed up. So I did okay. Then when I was a third year student, I got a letter from the local economic historian who’d basically look through the records and find somebody with majoring in both economics and history. So he wrote me a letter and said, “Would you like to be my research assistant?” And then I became his teaching assistant. Then at some point, he told me, “Oh, you really should go and get a PhD, but not here. You should go to the US.” I found from the very beginning economic history to be a particularly attractive part of economics because I always felt it was about real people. You know what I mean? You actually talk about entrepreneurs and inventors and rulers and so forth. Whereas much of economics has this sort of mystical figure called the representative agent. And nobody’s ever met a representative agent and she or he does not exist really. They are sort of simplifying assumption. So a rational individual would do this and that and you write an equation and you follow some calculus, you maximise it or something, and then you get it. In economic history, we do some of that because we have to play by the rules. But basically, it is about people who don’t just wanna maximise profit, but also have fears and suspicions and phobias and on and on and on. So they’re much more human. If you read a book about a sort of a typical entrepreneur, you realise that in addition to somebody maximising profit, he’s also typically quite neurotic and obsessive. Economics has no mathematical term for neuroticism.

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Svensson: There are two citations to this prize. First for Joel Mokyr, for having identified the prerequisites for sustained growth through technological progress. Can you break that down for us?

Smith: Well, yes, I’ll, I’ll try. The story goes that until the industrial revolution, there was basically stability in economic growth terms. The committees tend to use this word stagnation, but that sounds very negative. I don’t know whether that’s how it felt. But anyway, from about 200 years ago onwards, the rich world first and then the wider world has seen sustained economic growth. Joel Mokyr sought to explain what created that change and what led to the sustained economic growth. He breaks down knowledge into prescriptive knowledge, which is the practical instructions of how to do things which has always existed, of course. And there’s propositional knowledge, which is the investigation of why things work. You might say natural sciences perhaps. That also existed always. But he suggests that those two things operated rather much in isolation before the enlightenment. And what happened at the enlightenment was that there began to be a much better crosstalk between them so that propositional knowledge, why things work, fed more into this prescriptive knowledge of how to make things happen. And then that in turn fed propositional knowledge. So there was much more of a feedback between these things, which allowed ideas developed in the sciences in particular to feed into progress in technological change. That became an ever-increasing kind of cycle, which drove technological progress and drove growth.

Svensson: So sort of things building upon things.

Smith: Absolutely. And very importantly, the other big change that had to happen or rather the change that facilitated that feedback was that society had to be open to such exchange. So there was a change generally in the thought process of these nations that were adopting these changes. They became keener on change and less opposed to blocking change.

Svensson: So change and being open to change.

Smith: Yes. Or rather change, exchange and being open to change perhaps.

Svensson: Right. The second citation is for Peter Howitt and Philippe Aghion, it’s part of the prize, for the theory of sustained growth through creative destruction. What is creative destruction?

Smith: Joseph Schumpeter working in the 1940s said it was the essential fact about capitalism. It’s the idea that new innovative products displace market leaders from their position of being market leaders and they are made obsolete. So it’s the way that innovation drives change in the market, which in turn leads to growth. And that is as defined by Aghion and Howitt in their mathematical model.

Svensson: Both destruction and being obsolete sounds kind of terrifying.

Smith: Yes, doesn’t it just? And indeed, I think Marx was also interested in this idea, but he thought that this would indeed lead to the demise of capitalism. But seems to have been incorrect.

Svensson: So what was the mathematical model about?

Smith: Well, it links all these things in the economy like production and R&D and financial markets and savings and pulls it together in a model which can be used to describe how this innovation drives a cycle of change as better products displace less innovative things. And with that model to hand, you can then explore questions like the role of market dominance and whether it’s good or bad that if firms have too big a share of a particular market, how much government should subsidise research and development. The effects of different levels of subsidy on how much innovation you have in the market and how much innovation is good. Is it good to have things changing all the time or is it better to have slightly more stable situation? It all depends, I suppose, on whether the innovation really creates increased benefit.

Svensson: So what you’re saying is that destruction can be good and innovation can be bad?

Smith: Oh, well, hang on a second. Certainly, I wouldn’t argue innovation per se is good, is neutral. Innovation is just change isn’t it?

Svensson: And so is destruction maybe as well.

Smith: Well, it depends what’s being destroyed.

Svensson: It’s been described as a very timely prize. There are many connections to big issues being debated today. What are those issues?

Smith: Well, I suppose the obvious one is AI. There’s really nothing out there that gets discussed without AI being mentioned. And its potential to change things, to innovate for benefit or perhaps not such great benefits talked about all the time. These models play directly into that. We talk about that a little bit with these economists. But of course, there’s a lot more to say.

Svensson: We’re saving some of the best AI thoughts for a special episode later in season. So you get little tidbits here, but then more of it later.

Smith: Yeah, because it can’t help but come up in conversations with almost every laureate so of course.

Svensson: In every conversation with anyone these days, basically.

Smith: Well, speak for yourself.

Svensson: Well, let’s listen to Peter Howitt and then Philippe Aghion talk about these links to current debates.

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Howitt: Everybody immediately thinks of AI when they hear the words creative destruction and appropriately so. There is some relevance. People, of course, expect that I’m an expert on everything, including AI and what not. I don’t really know the detailed working of AI models and so on. But I have had a lot of experience thinking about disruptive technologies, obviously, and particularly big general purpose technologies, computer electrification and so on. There are a number of patterns that we’ve seen, which I think are worth at least bearing in mind when we’re thinking about what AI is going to bring. And a lot of students right now graduating from college are quite nervous about their future and don’t know how AI is going to affect it and so on. I think that the perspective that I have gives them a little bit more optimism because if you take a look at what happens with a big general purpose technology, at first it comes about and it’s obvious that it’s gonna replace jobs. What’s not so obvious is that eventually it’s going to create all sorts of new jobs, new professions, new tasks, new occupations that we hadn’t thought of before and typically more interesting jobs and occupations than existed before. I often tell students or just a general audience that imagine you were living 150 years ago in North America when 50% of the population had to be working in a farm. And suppose you told them, which would turn out to be correct, that in 150 years because of technological improvement, it’ll only take a little bit more than 1% of the population to feed everybody and more so. Well, what do you suppose the other 49% are going to do? Yeah. The answer is that, well, there are all sorts of wonderful things that they could do and almost all of which were more enjoyable than working on the farm with very primitive equipment as they did 150 years ago. But it wouldn’t make any sense to them at that time. I mean, you could say, “Well, you could be a blogger or you could fly a jet plane or you could be an auto mechanic”. You could think of all sorts of things. It simply wouldn’t make sense. But because technology keeps you evolving, all these new things open up. The difficulty, of course, is you can’t foresee them. It requires further innovations. Innovations almost by definition are unpredictable. But it’s always worked in the past that way. There’s no theorem and economic theory that proves that this is inevitable, but it has happened in the past and every reason to think that it will in the future. And it provides a perspective that most people don’t have, which is a somewhat more optimistic perspective.

Smith: Yes. And that optimism is sorely needed because there’s a lot of optimism among those who are benefiting immediately financially from the technology at the moment. But there’s a lot of worry elsewhere. I mean, I suppose the pace of change with AI is somewhat faster, that leaves everyone reeling a little bit.

Howitt: Yes. There’s no doubt that it’s happening a lot faster, we don’t have 150 years to find these new occupations. And I think that’s gonna be a challenge. It’s gonna be a challenge for governments, for business, for academia, to keep people trained for the jobs that are sort of on the horizon and keep in touch with businesses that know what sorts of technologies are about to be put on the shop floor and as a role for governments to coordinate that kind of activity, I think.

Smith: And your work is at the cutting edge of what everybody is interested in. I mean, everybody is looking for innovation-driven growth. Everybody is trying to develop knowledge economy. Every country around the world wants to be there. That’s a difficult challenge for everybody. Can everybody get there? That’s the question.

Aghion: I think everybody can do something. It’s true that it was luck in a sense that the price was decided in 2025 because we are in the debate on AI. We are in the debate on green growth. We are in the debate of the European decline vs US and China. And how can we reverse course? And so we are at the intersection of all those debates. And the price came exactly at the moment, at the optimal moment. You see where all those debates are very hot. That’s what makes it so exciting. I believe that any country, there are talents everywhere. You would never have imagined what South Korea was after the Korean War. They were essentially producing rice. They didn’t have anything else. And they moved up. Why? Because they had a good education system. So I think if you set up a good education system, you are on for many possibilities. You can do a lot of things. And you will not imagine that some countries, you will not imagine where they come from. China, many people though China would never take off. Then there were some people who said, “Well, China will take off, but they will never get to become frontier innovators.” But they are frontier innovators. There are many pitfalls of the Chinese experience that I’m not there to say, “Mao’s great.” The so-called greatly forward and the cultural revolution were disastrous. But one thing they had was the education system. The education together with openness when they opened up, that took China very far. So education is very much at the heart of everything.

Smith: Absolutely. Yes, openness. I mean, at the moment, there’s a movement against openness.

Aghion: Absolutely.

Smith: How does one counter that? I suppose your answer would be by talking to people, by talking to the public, by trying to get them to understand that it is the wrong way to close borders.

Aghion: You tried to explain that, why is it important to have free trade? Because you have bigger markets for innovations. That’s what we call a market size effect, because you have more competition. Competition boosts frontier innovation because you innovate to escape competition. Another reason is that we know that trade carries knowledge transfers. For all those reasons, of course, free trade is growth enhancing. So now we live in a different world, but still there are countries like, European countries, Canada, possibly Singapore, Australia, some countries, they try to get together and we share some values. Of course, value chains will have to be remodeled. They cannot only be based on cost minimisation. Resilience will have to become an important criteria for setting up value chains, remodeling value chains, supply chains. But that’s a way to go. So that’s why Mark Carney’s speech at Davos was very important, I think. I’m very much into Mark Carney. He was my student, by the way.

Smith: Really?

Aghion: He studied creative disruption. Absolutely, he was a student at Oxford in 92, 93. He took my class on growth. He remembers he learned better in economics. Absolutely. That’s not the reason why I admire him. I found out later on that he was my student. But I think Mark Carney puts things, I think, in a inspiring way.

Smith: Yes, he captures minds.

Aghion: Yeah. And the way to remodel supply chains, we say the countries that are not US, not China and share some values, freedom, democracy, social model, we should get together, we should be the core of something new. I think that’s important.

Smith: There is with progress, innovation, change, also a feeling for some that they are in a way left behind, that they are abandoned in these changes. How do you bring everybody along with you? How do you prevent it becoming a very unequal distribution of progress?

Aghion: I think it’s very important to be inclusive because otherwise you fuel populism because all those who feel left out and ignored and despised, they go for the populist. Schooling is very primordial because you learn to learn at school. That I think is very important. Then I believe very much in making sure that you have a school system that places students. Either you pursue university or you go into apprenticeship and it’s very important to have that. The Swiss are very good on apprenticeship. Germany somehow as well. It’s very important to make sure that there is a future for any high school student. Be it apprentice or being a university or that’s I think is very, that’s very important. Then I think I believe very much in the flex security system on the labor market. I very much believe in the system. When you lose your job, the state should retrain you and help you find a new job. As long as you are either training or working, you should get a decent income. I believe in that very much. I also believe in encouraging firms that behave correctly with their employees. I understand that firms need to hire and lay off because you have creative destruction and you have new innovations. But it’s important also to discourage firms from using employees as toilet paper. You see what I mean? They should be encouraged to enhance soft skills, not only hard skills, what I call soft skills, that to say, “Well, you are in my firm. I want to teach you to take initiative, to be autonomous, to interact with others, to be a team leader, and to reward those skills as much as you reward the hard skills.” To be polyvalent, you need some firms that take employees and help them. I have a lab. My lab is a small firm. I want anybody there to leave the lab better off than she or he was when they enter the lab. I have a concern for people and I think we should reward those entrepreneurs and those managers who show concern for their employees. They’re not there just to make profits. They’re there also to make sure, that I think should also be encouraged, I think.

Smith: As well as your work within academia and with governments, you also like to speak to the public. You like to tell the public what’s going on. It’s a gift to be able to do that, but it’s also an extra challenge. Why do you do it?

Aghion: First, I think it’s important to have the contact with the public. I teach at College de France, and at College de France, you teach the public. It’s open. Anybody can come to your lecture. So if you want to have more than 30 people coming, I have 600 people attending, plus it’s on podcasts and then on radio. If you want to have a big outreach, you need to be accessible. I think also economics is very important to make economics accessible because it become popular. I think people know I really wanted to have something because I know that once the economics, when you do the economics, when you work on the model, of course, the model are sophisticated. But once you get into something, you can explain it simply. That’s what’s fascinating with economics. Very often, people get prize in economic sciences and when dispension where they got the price, people think it’s trivial. They don’t realise that to get to the trivial, it takes enormous amount of work. But that’s what I wanted. I wanted to be able to anybody because once economics is done, the ideas, you can explain that very simply when you’ve done the research. Of course, the difficulty is to get to the simplicity.

Smith: Nicely put. Because as you say, when new prizes are revealed, the phrasing tends to be previously we though this, which sounds a bit crazy, and then now we think this, which sounds more sensible. The sophistication is lost in that telling. But the sophistication allows you to tell it that way, I see.

Aghion: Exactly. And you shape up minds. You influence politicians, you influence thinkers, you influence the debate. I think it’s very important. Why did I want to do economics? To influence thinking, but well beyond the profession. Of course, I want to have disciples and to have people doing research on creative destruction, and they are very talented young researchers that keep up with the agenda and that pursue the agenda. But I wanted beyond economists and economic scholars, to have an influence on how people think. And we have important debates. For example, should we have a Zucman tax or not? Should we have this? It’s crucial which parading you use. And you can explain very clearly when you are in a paradigm where growth is driven by entrepreneurs with new ideas that try to grow why some policies are not appropriate. If you don’t have that framework, you cannot understand, but that you can explain very simply. That’s very important for me to be in the debate.

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Svensson: Economic growth is at the heart of this research, but the word progress is also used a lot. Are they interchangeable?

Smith: No, they’re not interchangeable because I suppose that economic growth has a very defined meaning within economics and tends to be related to GDP. Whereas progress is a far more fluid term and each person has their own definition of progress. I suppose broadly progress is a move towards a more advanced state, but what does that mean? Could mean a state of Nirvana which has very little to do with economic growth.

Svensson: Yeah, and also for whom, I guess, is one of the main questions when talking about progress.

Smith: Yes. I mean, obviously economists are interested in the maximum spread of benefit to the maximum number of people. And of course, the question of how innovation then drives benefits is also a very complex one.

Svensson: Especially in the age of AI, I guess.

Smith: Yes, surely. Joel Mokyr really pointed this out in his work, that it didn’t just take changes in innovative thinking to bring about increased benefit. It also took increased standards of living. It also took an openness to change in society, which we’ve already talked about. Naturally enough, Joel Mokyr does have some very interesting thoughts on the relationship between technical progress and human progress. But first, I asked Peter Howitt if he believes in the idea of endless progress.

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Smith: The innovations that you study and that have led to human progress, which I suppose is basically a improvement in material standards of living. Is it endless? One obvious question is whether the planet can sustain endless progress because although we improve our own lives materially, we don’t seem to be improving the planet’s life contributing to climate change, etc. So how do you see that continued growth?

Howitt: Well, I think that particularly when it comes to climate change, that we desperately need more innovation. We’re not gonna solve that problem without more innovation. And in fact, we’ve gone a long way already towards solving it with innovations that have taken place in clean energy. In most parts of the world right now, the least expensive way, most economical way of producing electrical power is by using solar or wind, possibly nuclear, which is has its own problems, but not by burning things. We continue to burn things because we have a lot of energy needs. We need to use all the energy we can find for a lot of things. And of course, AI is accelerating those energy needs. So we have to continue to innovate, I think. I don’t see it being feasible to really stop progress and say, “Okay, no, we have to stop doing everything that require a lot of energy.” That’s just not gonna work. I think the way forward is the way we’ve solved so many other problems in human history. We’ve eradicated diseases that used to ravage populations and we’ve made interesting jobs available for the whole population rather than half of them having to stay at home doing housework. We’ve done so many things through innovation. We’ve solved so many problems. I think that we’re going to solve this. I mean, someday we’re gonna find a way of harnessing nuclear fusion. We’re gonna find ways that produce the energy that we need to do what we wanna do without damaging the planet. And I think we have to keep moving forward. Of course, a lot of that success that we’ve made so far with clean energy has come about because of government programs that have subsidised this. I just see that innovation is the way to solve those problems just as it’s been the way to solve so many of humanity’s problems in the past.

Smith: Are you hopeful, are you optimistic that the innovations to come will care for everybody, that it will bring all of humanity along with it?

Howitt: I’m not entirely confident about that, no. I think we have the potential. I think we’re soon gonna be rich enough that everybody can be taken care of whether they can find a job or not. But whether we can organise that is a different matter altogether. I take a look at the influence of these fantastically wealthy billionaires in US politics nowadays. It seems like a pretty daunting problem to curb their power.

Smith: From the 18th century to now, broadly, the argument is that the quality of life of the majority of the people on the planet has increased. It’s getting better because of all of this. Does that continue? Does that also not converge? And as long as knowledge continues to spawn discovery continues to spawn technological progress, do people’s lives necessarily improve, do you think?

Mokyr: It depends who people are here. A lot depends not so much on the technology itself, but on the people who implement and regulate it. If properly channeled and controlled, I think there’s no reason why that shouldn’t be the case. Now, it is not impossible as some people fear that some technology will lead to a very sharpening of income inequality, for instance, in which we have the world’s first billionaire, which everybody’s talking about but we have a whole bunch of really, really wealthy people whereas ordinary people live, as the Americans like, to say, paycheck to paycheck and so on and so forth. But that is not the fault of technology. That’s the fault of politics and institutions. And that’s in some ways, a separate story. That’s where the problem is. It is not technology itself. So I wanna make two remarks about that, that I want people to think about. One of them is that we cannot afford to keep improving technology for the simple reason that humanity really faces two major existential challenges that if we don’t deal with them, that they may undo much of the gains that technology has given us over the last 250 years. One of them, of course, is global warming that everybody knows about. The other is demographic change and a decline in birth rates, which changes the age distribution and everything else. Now, both of those things were unanticipated effects of the process of growth itself. So in a way, we brought these things on ourselves by growing so far. They’re different, of course, but essentially both of them would not have happened if it hadn’t been for the Industrial Revolution. And so how do we deal with these things unless we all want to boil like the famous frog in the glass vessel? And the answer, of course, must be more technology. Now, this should be a different kind of technology. It should be green rather than brown dealing with the demographic changes. It will require very different technology than dealing with climate change, but both of them will require a great deal of progress. So I think that really is crucial. The people who are talking about degrowth and we’ve grown too much and we should stop it. If we follow those people’s prescription, humanity will face a terrible disaster. We need to invent ourselves out of our own mistakes. In the very long historical run, I think the very wide use of fossil fuels, which of course, unbeknownst to the people who started this, has turned out to have a major effect that nobody expected at the time, but that we have to deal with. And so how do we deal with it? The answer is, of course, that we know of ways of creating energy that don’t involve burning of fossil fuels. But it’s expensive. What does expensive mean? Well, it requires more resources. Well, how do you get more resource? Well, you grow and you create more resources. In that sense, this is going to be inevitable. That’s it. I only wanna make a second point here. And that is there are technologies on the horizon and they’re no longer within the realm of science fiction that may be as radical as anything we’ve seen in the past. So I was just sort of looking a little bit around at what’s known as rejuvenation technology. So science today is working very hard for all the obvious reasons in trying to figure out what is causing aging in any organism, but of course, specifically us. And in fact, we know a lot more about sort of cellular senescence as it’s known that’s causing our hair to grow white and our physical and biological functions to slowly sort of deteriorate and eventually, of course, we all die. I don’t think anybody’s gona claim to find the stone of the wise, which gives us immortality. But life expectancy on this planet of humans has doubled since the middle of the 19th century. If you told anybody in 1850 that their descendants would live to 82, 83, which is the case now, they would look as if you were mad. And so should today go around and you tell your students or your colleagues and they say, “Oh, I think, you know, in the year 2150 people will live to be 150. You’d look like a nut or somebody read too much science fiction back.” In fact, it’s happened before. I think it is not beyond the power of science to come up with something that will do that. Now, what the world will look like if people live to be 150? I don’t know. But let me put it this way. If you were living in 1850 and somebody said, “Well, conditional life expectancy going to 80, what do you think is gonna happen?” Not a lot of them would’ve said, “Well, what will happen is that people will retire in their early 60s and spend 20 years actually enjoying their lives,” Which is precisely what’s happened. In the past, the idea of the golden years would’ve been absurd. You work until you drop dead or close to that. Once you were too weak to work, you were too weak to live and you died very soon. So very few people reached their 60s and 70s. It does happen, of course, here and there. There’s always a normal distribution, but, and people are in the tail, but it was very uncommon, particularly among the working classes about rules life expectancy we don’t know as much as the nobility and their loyalty. But even there, people just had no clue as to what were the things that killed them. So my sense is we have gained something enormous. We have gained a world in which people start working at age, what, 24, 25, they go to college, then they go take a year, they travel around the world and they quit when they’re in their early 60s. That would’ve been unactionable in 1750.

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Svensson: A recurring theme this season seemed to be friendship. How did friendship play a role in the economic discoveries of this year?

Smith: There’s a deep and abiding friendship between Philip Aghion and Peter Howitt. It was a chance meeting. As you’ve heard in the episode between people who are quite unlike each other but they really hit it off. That’s one of the nice things about many combinations of Nobel Prize laureates. They illustrate the diversity of friendships and how you can never predict who’s gonna like who. But when two people do like each other, a lot can happen. Your question made me think that actually there’s also this, again, back to Joel Mokyr’s work, this friendship between different sorts of thinking, friendship between the why things work and the how things work. Which was so important to driving change. There’s friendship there and I’m sure individually, if you look back, it’s friendship between the doers and the thinkers in the age of enlightenment that led to all this. So I suppose you could argue that in a very great sense, friendship has played an enormous role in this work and all work.

Svensson: Well, let’s listen to Peter Howitt and Philippe Aghion talk about how friendship and a friendly environment benefited their work.

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Howitt: Well, as I mentioned that the introduction of my Nobel lecture, my curiosity kept pushing me up in different directions and Philippe and my wife collaborated to keep bringing me back to focus on growth theory.

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Howitt: That year at MIT for me was a great year. I was working on other things. I actually wrote three papers, started three papers that year. They ended up being published in top five journals. The one with Philippe was just one of them. They all started that year and they were all published in 1992. So they were all published in the first journal to which I had submitted them.

Smith: So I suppose every academic dreams of a year like that when the ideas are flowing and the environment is right. What it, apart from the place, MIT, a good start, what was it that was right about that year that made everything click for you?

Howitt: Well, I think was largely the environment. MIT was a wonderful place. They had top talent. Bob Solow was there. That was actually the year that he won his Nobel Prize for his work. That sort of became our sort of whipping boy for our work that we did. Actually, Ebsi Domar was there as well. And when Solow wrote his pathway in work in 1956, his whipping board had been Ebsi Domar. He was there as well. We got to meet Paul Samuelson to talk with him. Peter Diamond was there, there was so many people. Olivier Blanchard was a great help. The thing about MIT at the time was that there were these great people and they all kept their doors open in their offices. You could feel free to just walk in and wanted to talk to somebody and interrupt them. Your votes are welcome to do that. And then every Wednesday, there’d be a big faculty lunch to which I was invited as a visiting professor and got to sit down and have sandwiches with Charles Kendall Berger or Paul Samuelson, Frank Fisher. Just a great environment. Everybody was enthusiastic, would read your papers, comment on them, a great seminar series. It was the best academic environment I think I had been in. I was lucky. I’ve been in many good work when I was at Western Ontario, which I had been all the time until I was just taking a sabbatical leave from that. That was a great environment as well. But it wasn’t full of laureates like MIT was, but it was very conducive to research and collaboration. I guess it was a good time for me at I had just turned 40 and was feeling very comfortable about what I had done, which had had nothing to do with growth theory, but I just was feeling good about what I had accomplished already. I had no idea that my best work was yet to come. I think that was a good age. I mean, now maybe mathematicians do their best work in their 20s. Medical economists can last a little longer than that.

Smith: How important is the friendship in this work? Because it strikes me that you needed each other and that you fed off each other’s ideas and worked brilliantly together, but you also both, I suppose, could have tackled this work solo to a certain extent and you chose not to. So talk a little bit about having an academic friend in if you see what I mean.

Howitt: Well, it is important that you be good friends, you enjoy each other’s company. Because I mean, we’ve add up the hours that we worked together, thousands of hours and you got to enjoy each other’s company and he’s a great company. We had a lot of fun together. We would laugh together. We would work together as a black bear and we would reach one dead end after another, but we were always enthusiastic. We figured we’ll get there. And Philippe was full of jokes and it was great fun that he was all sort of give up something that didn’t look like it was going somewhere and try a different line. I was always the one that said, “Well, no, no, let’s, let’s push this a little further and see what happens.” And very often he was right, but occasionally it did pay off to pursue it a little further. We were very complimentary in our personalities as well as in our original training that we enjoyed each other’s company.

Smith: It’s lovely, but I suppose for young people starting out, the question is, should you try it alone when you have a good problem? Or should you share your ideas with others and find a friend? Which means, I suppose, a shared glory if it all works out, but possibly faster progress. That’s a difficult decision to make if you haven’t. In a way, it’s easier for you when you were just turned 40, you’d seen a lot. But how do you know how to make that call?

Howitt: I think nowadays, working on your own is getting more and more rare. There’s so much written knowledge out there in the world. So much more to master than there used to be that you really do need collaborators. It’s hard for one person to have the breadth of knowledge as well as the depth of knowledge that it takes to really pursue a good idea. I don’t see that as being a difficult trade-off. I think you really do have to seek out collaborators in the world as it is today.

Smith: Whether they’re AI collaborators or human collaborators.

Howitt: There’s that too, I suppose. I wouldn’t have had nearly as much fun working with a chatbot as I did before.

Smith: I’m often struck speaking to economists that you like to partner with each other. I mean, you’re social scientists and you’re social people. It’s interesting that you decide, “I’m going to work with Peter Howitt. I want to do this together. I’m not going to sort of keep it to myself. I can see the advantage of working jointly.” I suppose it shows a certain humility that you see that other people have things that you need.

Aghion: Absolutely. Yeah, it was super additive. We would do Peter plus myself was more than… It’s a super additive, partnership. I think it was very much so.

Smith: It requires a slight sublimation of one’s ego because you’re sharing.

Aghion: But I will tell you something. You touch upon something important. I think great luck in my life has been to have failed many things. I failed many things before. I failed the aggregation on the mathematic. A number of things I failed. I failed the Society of Fellows. That’s how I came to MIT. I tell that story very often. What got me to MIT is because when I finished my, after my PhD at Harvard, my dream was to enter the Harvard Society of Fellows, which is a first rate postdoc. Very prestigious first rate postdoc. I failed the oral exam, but I didn’t pass that and they asked me a question I did not quite understand. What have I been asked? And thanks to which, there is worse fall back then getting to MIT. MIT is a very good… But my dream was to get into the Society of Fellows. And I came to MIT and I met Peter Howitt. Imagine I had succeeded the exam, the oral test for the Society of Fellows. Probably we will not be here today exchanging. There will have been no Nobel Prize, no nothing. So I’ve been failing many things in my life. I think that gave me enormous humility. It contributed to give me a humility. Also the fact I could take risk and be resilient and learn to be resilient. I think all those I got for having failed a number of things, of tests.

Smith: That’s fascinating. Do you remember how you felt when you didn’t make the Society of Fellows at Harvard? Did you quickly pick yourself up or was it a long period of adjustment?

Aghion: Pick myself up. There was a job market and there were good news. I mean, to MIT and MIT, of course, is a fascinating department. Stanford, Princeton, I was not… But I knew that I would have chosen the Society of Fellows if I got the Society of Fellow. And fortunately, I didn’t. And with Peter Howitt, we wrote our model between December 87 and February, March 88, because then in April, he was leading back to Western Ontario. By February, end of February, we had the model.

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Smith: Let me just go back right to the beginning again and ask you, how much are you enjoying being reengaged in all of these conversations when you thought you might just be out on the golf course?

Howitt: I am enjoying it. I mean, I could just refuse every engagement that’s come my way, I suppose. So I’m making a voluntary choice to fly all over the place to give talks. I am enjoying it. As I said, I went back to Northwestern where I got my PhD. That was great fun. I’m going back next week to Western University in Ontario where I taught for many years and I’ve been back to Brown and going back to Brown again. So in a sense, it’s almost like a victory lap, I suppose. It’s great fun to reconnect in a way that simply wouldn’t have been possible otherwise, it just wouldn’t have happened otherwise. People would want me to come back and have these wonderful events. Then I’ve gone to other places, other universities here and in China. I just came back from eight days in China where I visited some universities there. Talking with students has been really enjoyable, just to the next generation to see what they’re interested in, what they’re doing. I also hear what they’re worried about. And I feel that I’ve been able to give them a perspective to help them. So it’s been… I don’t, these are possibilities that I never would’ve dreamt of having in the past. So as I said, I thought 13 years ago I was gonna start a new chapter in my life and I did, but I didn’t expect it. Now there’d be another chapter. I imagine come next October the opportunities won’t be quite as big as they are now because there’ll be some new laureates that’ll attract a lot of the attention and that’s fine. So I’m trying to make the most use of this year if I can.

Smith: It was a huge pleasure speaking to you. Thank you very much indeed.

Howitt: Well, thank you, Adam. I enjoyed it very much.

Aghion: No, it was a pleasure to exchange with you, Adam. We are very close, the three of us. We have a very wonderful relationship for years, Joel, Peter and I. I was so happy to share it with them.

Mokyr: I’m turning a big eight old this summer, but I plan to be around for a long time, Adam.

Smith: You look fantastic.

Howitt: Thank you.

Mokyr: All right. Take care. It was a pleasure. Bye-bye.

Svensson: That was good company to be in for an hour.

Smith: Wasn’t it just? Yes. And my only regret is that we didn’t get Joel Mokyr to tell any of his endless story jokes. He could actually fill an entire episode just reading them off, I’m quite sure.

Svensson: Well, that’s an idea for next season.

Smith: Yeah, a whole season of laureates telling jokes. That would go down well, actually.

Svensson: Is there another candidate for that?

Smith: Yeah, there are many candidates.

Svensson: You got your work cut out for you then.

Smith: I’m happy to be thinking about it, but maybe we shouldn’t have mentioned this on air because somebody will go off and steal the idea. I rather like it.

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Svensson: If you’d like to learn more about the 2025 prize in econnomic sciences, don’t miss this episode’s show notes. There we help you explore the science and the minds behind the medals with articles from nobelprize.org. You can also relive the excitement of the prize announcement or the pageantry of the Nobel Prize Award ceremony in film clips from our YouTube channel. Don’t miss it. Nobel Prize Conversations is a podcast series with Adam Smith, a co-production of Filt and Nobel Prize Outreach. The producer for this episode was me, Karin Svensson. The editorial team also includes Andrew Hart, Olivia Lundqvist, Monica Mileur, and Simon Doyle. Music by Epidemic Sound. You can find previous seasons and conversations on Acast or wherever you listen to podcasts. Thanks for listening.