Why Acemoglu, Johnson, and Robinson’s Nobel Prize was inevitable - by Kaj Thomsson

Their Transformative Contributions

This year's prize honours their research on how institutions are formed and how they shape prosperity. Acemoglu, Johnson, and Robinson (AJR) have advanced our understanding of development in two ways. First, their research empirically explores the long-term determinants of prosperity, brilliantly demonstrated in their influential paper, The Colonial Origins of Comparative Development. Here, they employed sophisticated statistical methods to show how colonial institutions set the stage for modern-day economic disparities. 

Second, their work, particularly in Why Nations Fail, laid out a compelling framework for how political and economic institutions interact to shape development. They argue that inclusive institutions, which provide checks and balances and enable broad participation, foster long-term prosperity. In contrast, extractive institutions—designed to concentrate power and wealth in the hands of a few—stifle innovation and trap societies in poverty.

This is not just a simple "democracy equals development" argument. AJR's work is more nuanced, examining the broader dynamics between the state, society, and economic structures. Their theory is that societies where elites use institutions to extract resources from ordinary people cannot fully harness their potential, limiting growth and development.

Criticisms and Challenges

Their work is not without controversy. One of the main criticisms is their use of statistical methods, particularly in their colonial origins paper, which some argue may oversimplify the complexities of historical development. Another critique is that their framework may overemphasize Western institutions, especially in light of China's rise, which challenges some of their core arguments. Additionally, some critics argue that AJR's conceptual model tries to do too much, simplifying historical realities that are far more complex.

Moreover, the Nobel Prize has previously been awarded to scholars who focused on the importance of institutions, such as Douglass North, Elinor Ostrom, and Oliver Williamson. Some may argue that AJR's work is too similar to these earlier contributions to merit a separate prize.

Despite these criticisms, AJR's work remains a benchmark for interdisciplinary research that bridges economics and other social sciences. It has sparked meaningful dialogue and inspired scholars to explore the role of institutions in development more deeply.

Broader Impacts and Personal Reflections

Beyond their specific contributions to institutional economics, Acemoglu, Johnson, and Robinson have also broken down the walls of academia. Their ability to translate complex research into accessible formats, like their book Why Nations Fail, has brought their insights to a much wider audience.

Personally, I remember from my PhD days just how exceptional Daron Acemoglu is. During those years, he spent time visiting my department, attending weekly seminars in almost every subfield of economics: development, political economy, labor, macroeconomics, microeconomic theory, and more. He seemed to have deep expertise in each topic and contributed meaningfully across all these areas. His breadth and productivity are legendary—so much so that colleagues used to joke about an army of Acemoglu clones working in his basement. Yet, he was also generous with his time, engaging thoughtfully with PhD students and fellow researchers.

While Acemoglu's solo achievements are extraordinary, I'm pleased to see him share this prize with Robinson and Johnson. Their collaboration has been vital to their success, showcasing the power of teamwork in research. Each scholar brings unique strengths, complementing one another in ways that have pushed the boundaries of economic knowledge.

A Well-Deserved Recognition

This Nobel Prize is more than just a recognition of their work on institutions—it celebrates their broader career achievements and their profound impact on both economics and related fields. Their methodological breadth, innovative use of historical data, and interdisciplinary approach have made them central figures in contemporary economic thought.

The Nobel Prize system itself has its limitations—especially in how it sometimes discourages originality and thoughtfulness. But within the rigid parameters of the economics prize there's no question that Acemoglu, Johnson, and Robinson are deserving laureates. Their work has reshaped how we think about the role of institutions in development and has inspired a generation of younger scholars to follow in their footsteps.