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Portrait of Paul Krugman
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Sveriges Riksbank Prize in Economic Sciences · 2008

Paul Krugman

He explained why similar countries trade similar goods and why cities keep growing, changing how we understand globalization.

The Nobel citation: “for his analysis of trade patterns and location of economic activity”
Born
February 28, 1953, New York, NY, USA
Affiliation at the time
Princeton University, USA

Economics prize

2008

Awarded alone.

Age that year

55years

Born in 1953.

Sources cited

33

Fact-checked September 24, 2026.

  • As a teenager he secretly dreamed of becoming a 'psychohistorian' from Isaac Asimov's Foundation novels. He decided economics was the closest real thing.
  • The 1979 paper at the heart of his Nobel ran only about 10 pages, and it followed a frustrating year and a half of journal rejections for his new trade ideas.
  • He was the sole winner of the 2008 prize, at a time when the economics prize was usually shared, and the committee stressed it honored his research, not his New York Times columns.
  • As a young staffer in Ronald Reagan's White House in 1982-83, he wrote most of the 1983 Economic Report of the President.
  • In 2019 he publicly admitted that he and other economists had underestimated how hard trade with China would hit American factory towns.

The breakthrough

Why similar countries trade similar goods, and why cities keep growing

For almost two centuries, economists explained trade by differences between countries: one has sunshine for grapes, another has coal and factories, so each sells what it makes best. But after the Second World War much of the world's trade looked different. Rich, similar countries swapped similar products. Sweden sold Volvos to Germany and bought Mercedes and Volkswagens back. The old theory could not explain this.

In a paper of about 10 pages in 1979, Krugman showed that two simple facts are enough. Making things in big batches lowers the cost of each one, which economists call economies of scale. And shoppers like variety. Put together, each country specializes in some versions of a product and sells them worldwide, so buyers everywhere get lower prices and more choice. Picture two towns, each with a small bakery. If deliveries are cheap, one bakery can make only bread and the other only pastries; each bakes more for less, and both towns get more to choose from.

In 1991 he used the same tools to explain where people live. Add transport costs and workers free to move, and a region with a head start draws firms and workers, which draws still more, like a rolling snowball. Small advantages or historical accidents can grow into a crowded, rich core and a lagging periphery. As he put it, the 80 million people along the US East Coast are there largely because everyone else is there too.[3],[4],[5],[6],[7],[8]

“We all want power, we all want success, but the ultimate reward is the simple joy of understanding.”
Paul Krugman, The closing words of his autobiographical essay 'Incidents from My Career', on what drives him as an economist.[10]

What it meant for humanity

Krugman's theories did not invent a product or cure a disease. They changed how economists, governments and students understand trade and cities. Until he and a few contemporaries built new models in the late 1970s, economists lacked a rigorous way to explain why rich countries trade so much with each other or why industries cluster in places like Silicon Valley. His models showed that such trade brings real gains: longer production runs, lower prices and far more variety. Later researchers measured that variety. Building on his 1979 model, Christian Broda and David Weinstein found that the number of product varieties the United States imports quadrupled between 1972 and 2001, a gain worth about 2.8 percent of US GDP that official price statistics had missed.

His framework became a working tool. The Nobel committee notes that calculations of what happens when trade barriers are removed now rest on models descended from his, and that the World Bank routinely uses such models to assess world trade talks. His geography work made cities and regional clusters a mainstream subject in economics. His 1979 model of currency crises set the standard for studying speculative attacks on fixed exchange rates, and his 1998 paper on Japan's slump revived economists' interest in the liquidity trap, the situation in which interest rates are stuck near zero and a central bank's usual tools stop working.

He also taught economics to a mass audience. His textbooks, including the long-running International Economics with Maurice Obstfeld and principles texts written with his wife, the economist Robin Wells, are widely assigned. For nearly 25 years his New York Times column explained budgets, trade and financial crises to millions of readers.

  • Building on his 1979 love-of-variety model, Broda and Weinstein found that US imported product varieties quadrupled from 1972 to 2001, a gain worth about 2.8 percent of GDP.[23]
  • Calibrated models descended from the new trade theory are routinely used, for example by the World Bank, to estimate the effects of rounds of world trade negotiations.[6],[7]
  • His 1991 geography model became a core tool of urban economics: Harvard's Edward Glaeser counts it among just two models his urban-economics PhD students must know by heart.[22]
  • His 1979 model of speculative attacks on fixed exchange rates set a new standard for studying currency crises and inspired a large later literature.[6]
  • He co-wrote widely assigned textbooks, including International Economics with Maurice Obstfeld, and from January 2000 to December 2024 his New York Times column explained economics to millions of readers.[2],[11],[12],[21],[22]
  • His 1998 study of Japan's slump revived economists' debate over the liquidity trap, when interest rates near zero leave a central bank's usual tools powerless.[12],[33]

Impact in numbers

We record no quantified impact claims for Krugman. His prize-winning work explained patterns of trade and city growth; it did not cause them. Trade among similar rich countries was booming before his 1979 paper, and its gains, such as the quadrupling of imported product varieties that Broda and Weinstein valued at about 2.8 percent of US GDP, belong mainly to the firms, workers and governments that opened markets. Any share credited to a theory would be guesswork. His real influence is on understanding: a shared framework that economists and bodies such as the World Bank use to estimate what trade deals do, a revived field of economic geography that helps explain rural decline and the growth of great cities, standard models of currency crises, and textbooks and columns that taught economics to millions. Those effects are large, but they cannot honestly be turned into a count of lives or dollars.

EconomyFundamental scienceEducation

No number is given here on purpose. Some contributions cannot be counted honestly, and we would rather describe them than invent a figure.

The double edge

No physical harm is tied to Krugman's research, and we record no harm numbers. The criticisms concern judgment. In the 1990s he was among the most forceful defenders of freer trade and dismissed several critics who warned it would hurt workers; in 2019 he conceded that he and other economists had missed how fast trade with China would grow and how hard it would hit particular American communities. His own theory also showed that trade barriers or subsidies can, in special cases, benefit a country, an idea protectionists could seize, although he argued that free trade remained the sensible rule. Like many commentators he made some memorable wrong calls, including a 1998 quip that the internet would matter no more than the fax machine and an election-night forecast in 2016 of lasting market damage that he retracted within days. He also consulted briefly for Enron before joining the Times, and a 2003 column about antisemitic remarks by Malaysia's prime minister drew criticism from some Jewish critics.

  • Moderate

    Underestimated the China shock to American workers

    In the 1990s he estimated that trade with developing countries had only modestly widened the pay gap between skilled and unskilled US workers, and he called some critics' warnings silly. By 2008 he was reconsidering, and in 2019 he wrote that economists, himself included, had missed the rise of hyperglobalization and the concentrated damage Chinese import competition did to manufacturing communities.[26],[27],[28]

  • Minor

    A theory that could be used to justify protection

    His models implied that tariffs or export subsidies could, in special cases, leave a country better off, opening the door to 'strategic trade policy.' In 1987 he wrote that free trade had lost its innocence and was now a reasonable rule of thumb rather than a proven optimum, but he still favored it, citing the political costs of intervention and the difficulty of picking winning industries.[6],[12],[25],[27]

  • Minor

    Memorable wrong calls

    In a 1998 Red Herring article he predicted the internet's economic impact would prove no greater than the fax machine's; he later said he was being provocative and got it wrong. On election night 2016 he wrote that markets might never recover and a global recession was likely, then retracted the call three days later. He also says his target-zone model of exchange rates, arguably his most successful paper, does not work empirically.[10],[13],[29],[30],[31]

  • Minor

    Brief consulting for Enron

    He consulted briefly for Enron before joining the Times in 2000. The New Yorker reported that until the Enron scandal he saw no real problem in American corporate governance and had dismissed letters claiming companies were cooking their books; he said he had trusted markets and regulators to enforce honesty.[13]

  • Minor

    2003 column on Mahathir's antisemitic remarks

    When Malaysia's prime minister, Mahathir Mohamad, said Jews rule the world by proxy, Krugman called the remark inexcusable but argued it was calculated domestic politics that revealed rising anti-American and antisemitic feeling among Muslims, which he tied to the Iraq war and Washington's unconditional support for Israel's Ariel Sharon. The column drew heavy criticism from some Jewish critics.[11],[32]

Against the odds

Krugman grew up in the safe, prosperous America of the 1950s and 1960s and describes his own background as utterly conventional: a middle-class suburb, an ordinary high school and a lot of science fiction. No source we found records him facing antisemitic discrimination in his education or career. His family's story shows how recent that security was. His paternal grandparents came from Brest-Litovsk, a town that was about two-thirds Jewish in 1897. During the First World War its Jews were expelled, and in the civil wars that followed at least 50,000 Jews were killed in pogroms across the former Russian Empire. The Krugmans reached Ellis Island in 1922, two years before the United States passed a law that sharply cut immigration from Southern and Eastern Europe. His parents grew up poor in Brooklyn. The community his grandparents left behind suffered a pogrom in 1937 and was then almost wiped out: German forces occupied Brest in June 1941 and murdered most of its Jews by the end of 1942. Decades before Krugman entered Yale in 1970, Harvard, Yale and Princeton had used vague 'character' tests to hold down Jewish enrollment. His career reflects the opportunities his grandparents' move to America made possible.

  • —

    Persecution

    His paternal grandparents came from Brest-Litovsk, whose Jews were expelled during the First World War; about half returned in 1919. In the civil wars of 1918-1921, pogroms killed at least 50,000 Jews in the former Russian Empire. The family reached Ellis Island in August 1922.[16],[17],[18]

  • 1924

    Discrimination

    Soon after the family arrived, the Immigration Act of 1924 set national-origin quotas that sharply limited immigration from Southern and Eastern Europe; its basic aim, in the State Department historians' words, was to preserve an ideal of US homogeneity.[19]

  • —

    Poverty

    His parents grew up poor in Brooklyn in immigrant families. His father later worked for Equitable Life Insurance on Long Island, and Krugman was raised in middle-class suburbs.[10],[13]

  • 1942

    Other

    The Jewish community his grandparents left was destroyed in the Holocaust. German forces occupied Brest in June 1941, murdered about 5,000 Jewish men within weeks, and killed most ghetto inmates by the end of 1942. Only a handful of local Jews survived. We found no record of which relatives, if any, were among the victims.[17]

  • —

    Quota

    From the 1920s, Harvard, Yale and Princeton used 'character'-based admissions to limit Jewish students. Krugman entered Yale in 1970, and we found no evidence that he personally faced such barriers.[13],[20]

Jewish background

Both parents JewishIdentified as Jewish, secular

Krugman comes from a Jewish immigrant family. His paternal grandparents, Borys and Fejga Krugman, came from Brest-Litovsk (now Brest, Belarus) and landed at Ellis Island in 1922; his mother's parents were also Jewish immigrants from the Russian Empire. His parents, David and Anita, grew up poor in Brooklyn. Describing his parents' pride in him, he borrowed their Yiddish word, kvelling, and in 2012 he counted himself among the many liberal American Jews while sharply criticizing Israel's government and defending Peter Beinart's book The Crisis of Zionism. No source we found describes religious observance.[11],[12],[13],[15],[16]

Key dates

  1. February 28, 1953

    Born in New York to David and Anita Krugman, who grew up in Jewish immigrant families in Brooklyn.[1],[12],[13]

  2. 1961

    At age eight, moves with his family to Merrick, a middle-class suburb on Long Island.[12],[14]

  3. 1970

    Graduates from John F. Kennedy High School and enters Yale, intending to study history.[13],[14]

  4. 1973

    A term paper on gasoline demand wins him a research assistant job with Yale economist William Nordhaus.[10]

  5. 1977

    Earns a PhD in economics from MIT and starts teaching at Yale.[3],[10]

  6. January 1978

    After a talk with his adviser Rudi Dornbusch, works out how monopolistic competition can explain trade, staying up all night in excitement.[10]

  7. 1979

    Publishes his roughly 10-page Journal of International Economics paper, the start of the new trade theory.[4],[6]

  8. 1982

    Joins President Reagan's Council of Economic Advisers as its senior international economist and writes most of the 1983 Economic Report of the President.[2],[10]

  9. 1985

    Publishes Market Structure and Foreign Trade with Elhanan Helpman, which became the standard reference on the new trade theory.[6],[10]

  10. 1991

    Publishes 'Increasing Returns and Economic Geography', founding the new economic geography, and receives the John Bates Clark Medal.[4],[6],[24]

  11. January 2, 2000

    Publishes his first New York Times column and joins the faculty of Princeton University.[3],[21]

  12. October 13, 2008

    Named sole winner of the Nobel Memorial Prize in Economic Sciences; at the banquet he calls the new theory a collective effort.[1],[3],[9],[14]

  13. 2015

    Leaves Princeton after 15 years to become a distinguished professor at the City University of New York Graduate Center.[11],[12]

  14. December 2024

    Retires as a New York Times columnist after nearly 25 years and starts an independent newsletter.[12],[21]

Sources

  1. 1.Paul Krugman - Facts · NobelPrize.org (Nobel Prize Outreach)
  2. 2.Paul Krugman - Biographical · NobelPrize.org (from Les Prix Nobel 2008), 2008
  3. 3.Press release: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 · Royal Swedish Academy of Sciences via NobelPrize.org, 2008
  4. 4.Popular information: International Trade and Economic Geography · Royal Swedish Academy of Sciences via NobelPrize.org, 2008
  5. 5.The Increasing Returns Revolution in Trade and Geography (Prize Lecture, 8 December 2008) · NobelPrize.org, 2008
  6. 6.Scientific background: Trade and Geography - Economies of Scale, Differentiated Products and Transport Costs · Economics Prize Committee, Royal Swedish Academy of Sciences, 2008
  7. 7.Award ceremony speech (Bertil Holmlund, 10 December 2008) · NobelPrize.org, 2008
  8. 8.Paul Krugman - Interview (telephone interview, 13 October 2008) · NobelPrize.org, 2008
  9. 9.Paul Krugman - Banquet speech · NobelPrize.org, 2008
  10. 10.Incidents from My Career (Paul Krugman), archived copy of his Princeton page · Paul Krugman, Princeton University (via Internet Archive)
  11. 11.Paul Krugman (Research Starters: Biography, by Bruce E. Johansen) · EBSCO, 2013
  12. 12.Paul Krugman · Wikipedia
  13. 13.The Deflationist (Larissa MacFarquhar) · The New Yorker, 2010
  14. 14.Paul Krugman, LI native, wins Nobel in economics (Associated Press, with Patricia Kitchen) · Newsday (via Internet Archive), 2008
  15. 15.The Crisis of Zionism (The Conscience of a Liberal blog, 24 April 2012) · The New York Times, 2012
  16. 16.In Search of a Man Selling Krug (Chris Dunham), citing census, Ellis Island and naturalization records · GenealogyWise (via Internet Archive), 2009
  17. 17.Brest (Mordechai Zalkin) · YIVO Encyclopedia of Jews in Eastern Europe, 2010
  18. 18.Pogroms (John Klier) · YIVO Encyclopedia of Jews in Eastern Europe, 2010
  19. 19.The Immigration Act of 1924 (The Johnson-Reed Act) · Office of the Historian, US Department of State
  20. 20.Getting In: the social logic of Ivy League admissions (Malcolm Gladwell, on Jerome Karabel's The Chosen) · The New Yorker, 2005
  21. 21.Paul Krugman retires as Times columnist (Kathleen Kingsbury) · The New York Times Company, 2024
  22. 22.Honoring Paul Krugman (Edward L. Glaeser), Economix blog · The New York Times, 2008
  23. 23.Globalization and the Gains from Variety (Christian Broda and David E. Weinstein), NBER Working Paper 10314 · National Bureau of Economic Research, 2004
  24. 24.John Bates Clark Medal: past recipients · American Economic Association
  25. 25.Is Free Trade Passe? (Paul R. Krugman), Journal of Economic Perspectives 1(2) · American Economic Association, 1987
  26. 26.Trade and Wages, Reconsidered (Paul R. Krugman), Brookings Papers on Economic Activity, Spring 2008 · Brookings Institution, 2008
  27. 27.Economists on the Run (Michael Hirsh) · Foreign Policy, 2019
  28. 28.What Economists (Including Me) Got Wrong About Globalization (Paul Krugman) · Bloomberg Opinion (via Internet Archive), 2019
  29. 29.Did Paul Krugman Say the Internet's Effect on the World Economy Would Be 'No Greater Than the Fax Machine's'? (David Emery) · Snopes, 2018
  30. 30.The Economic Fallout (Paul Krugman, election-night 2016 Opinion page) · The New York Times, 2016
  31. 31.The Long Haul (The Conscience of a Liberal blog, 11 November 2016) · The New York Times (via Internet Archive), 2016
  32. 32.Listening to Mahathir (Paul Krugman, 21 October 2003) · The New York Times (via Internet Archive), 2003
  33. 33.It's Baaack: Japan's Slump and the Return of the Liquidity Trap (Paul R. Krugman), Brookings Papers on Economic Activity 1998(2) · Brookings Institution, 1998

Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 4 corrections made. How we check

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