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Sveriges Riksbank Prize in Economic Sciences · 2025
Philippe Aghion
With Peter Howitt, he modeled creative destruction, showing how new ideas replacing old ones keep lifting living standards.
The Nobel citation: “for the theory of sustained growth through creative destruction”
- Born
- August 17, 1956, Paris, France
- Shared with
- Joel Mokyr, Peter Howitt
- Affiliation at the time
- Collège de France, France; INSEAD, France; London School of Economics and Political Science, United Kingdom
Economics prize
2025
Shared with 2 other laureates.
Age that year
69years
Born in 1956.
Sources cited
20
Fact-checked September 24, 2026.
- His mother, Gaby Aghion, founded the Paris fashion house Chloé. As a boy, he sometimes got help with his German homework from Karl Lagerfeld.
- He failed an oral exam for Harvard's elite Society of Fellows, took a job at MIT instead, and there met Peter Howitt, his partner for the prize-winning model.
- In 1956, the year he was born, Egypt froze the assets of many Jewish families after the Suez war, and his parents lost their family fortune.
- The core of his model fits in one line: an economy's growth rate equals how often innovations arrive times how big each step forward is.
- He joined the French Communist Party as a teenager. Decades later he co-chaired a French commission on artificial intelligence for President Macron.
The breakthrough
A mathematical model of growth through creative destruction
Robert Solow had shown that building more machines cannot keep an economy growing forever, because each extra machine adds less than the one before. Only better ideas can. But where do better ideas come from, and why do they keep coming? The Austrian economist Joseph Schumpeter had described "creative destruction" in words, but no one had turned it into a working model. In 1987 Aghion, a young MIT professor, and Peter Howitt, visiting from Canada, set out to do that. Picture a ladder. The firm on the top rung has the best product and earns extra profit, often protected by a patent. That profit tempts rivals to spend on research, hoping to invent something better and climb past it. When one succeeds, the old leader's product becomes obsolete. This is creative because something new appears, and destructive because something old loses its value. Their 1992 paper put this ladder into a model of the whole economy, linking research, profits, savings and interest rates. It produced a simple result: growth equals how often innovations arrive times how big each improvement is. The model also showed that a free market might invest too little in research, because inventors do not capture all the benefits, or too much, because part of a new firm's gain is simply taken from the old leader. Later, Aghion and colleagues showed that too little and too much competition can both slow innovation.[2],[3],[4],[5],[6],[14]
“I want to build up a theory that would allow us to make the world a better place.”
What it meant for humanity
Aghion's contribution is a way of thinking, not a product, so its effects on people's lives pass through researchers and governments. Before the Aghion–Howitt model, economists could say that technology drives growth but could not easily ask which policies speed it up or slow it down. Their framework made those questions answerable. It links growth to things governments control: competition rules, patents, research subsidies, education and unemployment insurance. The Nobel committee says its lesson, that competition and innovation policy must be designed together, is now built into antitrust thinking and debates about research subsidies. Its central warning is practical. Yesterday's innovators can use their profits to block tomorrow's, so economies need rules that keep doors open to newcomers. Aghion has also argued that growth and social protection can go together. He points to Denmark's "flexicurity" system, which protects workers rather than specific jobs by paying people who lose work while helping them retrain. The committee's own summary makes the same point. He has applied the approach to some of today's hardest problems. With Daron Acemoglu and others he showed in 2012 that, under some conditions, temporary carbon taxes plus research subsidies could redirect innovation toward clean technology. In the early 1990s he was deputy chief economist of the European Bank for Reconstruction and Development in London. He says the European Union's 2024 Draghi report on competitiveness and the World Bank's 2024 report on the middle-income trap draw directly on his theory. None of this can be counted in lives or dollars, but it has shaped how governments think about growth.
- The 1992 Aghion–Howitt paper in Econometrica was the first model of creative destruction that covered the whole economy at once, and the Nobel committee calls it a paradigm shift in growth theory.[3],[4],[15]
- Crossref, which tracks scholarly citations, records nearly 6,000 works citing the 1992 paper.[15]
- With Acemoglu, Bursztyn and Hémous he showed that when clean and dirty technologies can substitute for each other, temporary taxes and subsidies can steer innovation to clean inputs, and that delay is costly.[17]
- The World Bank's 2024 World Development Report on the middle-income trap urges countries to discipline powerful incumbents and reward merit, ideas Aghion says come from his work.[5],[20]
- His later research with colleagues links innovation by newcomers to social mobility. His Nobel lecture argues that education, competition and flexicurity let countries combine innovation with protection.[4],[6]
Impact in numbers
Aghion and Howitt gave economists a working model of the process that has raised living standards for two centuries: new products and methods replacing old ones. Because the model is built around firms that enter, innovate and exit, it can be tested against company-level data and used to compare policies. Research built on it has studied why productivity growth slowed as markets grew more concentrated, how countries stall in the middle-income trap, how to redirect innovation toward clean energy, and how to cushion the workers creative destruction leaves behind. Its influence is real but runs through ideas and policy advice, not a single invention, so we do not attach a number to it. Any figure for the growth it caused would be invented.
EconomyTechnologyEnvironment
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
We found no documented harm caused by Aghion's research. The debates around it concern its evidence, its focus on growth, and his political role. First, creative destruction has real losers: the theory itself predicts that faster growth destroys more jobs and can raise unemployment, which is why Aghion and the Nobel committee stress retraining and income support. Second, some critics argue that a growth-first view gives too little weight to the environment and to wellbeing that GDP does not measure. The Nobel committee itself notes that sustained growth is not the same as sustainable growth. Third, one of his best-known empirical findings, the inverted-U link between competition and innovation, has been challenged. Fourth, he has been an economic adviser to French politicians, most prominently Emmanuel Macron, and he argued against France's wealth tax.
- Minor
A critic says his focus on growth underplays the environment
In 2025 the philosopher Gilles Lecerf argued in AOC that Aghion's Collège de France seminar treated Europe's lag behind the US as an unquestioned axiom, and called for measuring progress with indicators other than growth. The Nobel committee also stresses that sustained growth is not sustainable growth.[3],[4],[18]
- Minor
The inverted-U finding has been contested
Aghion and co-authors reported in 2005 that innovation first rises and then falls as competition grows. Using the same data, economist Juan Correa found a break in the early 1980s. Once that break was taken into account, the inverted U disappeared: the link was positive in 1973–1982 and absent in 1983–1994.[4],[16]
- Minor
Political adviser and opponent of the wealth tax
Aghion advised Socialist politicians and then Emmanuel Macron, and a former Élysée adviser called him one of the first and main inspirations of Macron's program. He opposed France's wealth tax (ISF), arguing that it held back innovation, and a former finance minister dismissed him as a weathervane.[7]
Against the odds
Aghion grew up in Paris among artists and designers, and he did not personally face antisemitic persecution. His family's story, though, is tied to the end of one of the oldest Jewish communities in the world. Egypt had up to 75,000 Jews in 1948. After Israel's founding, hundreds were arrested and Jewish property was confiscated. After the 1956 Suez war, thousands were ordered to leave within days without their capital, and by the 1957 census only about 8,500 remained. Aghion's parents, left-wing Jews from Alexandria, had moved to Paris in 1945. In 1956, the year he was born, the Egyptian government froze the assets of many Jewish families, and the Aghions lost their fortune. Friends pooled money to help them rent and furnish a flat in the Latin Quarter. His father had already been forced to flee France for Rome in 1952 to avoid expulsion over his communist activism, and he later took Italian nationality. His mother never applied for French citizenship because she was convinced it would be refused. For many years she renewed her residence permit at the police prefecture while running Chloé. Philippe, born in Paris, chose French nationality when he came of age.
1956
Persecution
After the Suez war, Egypt's government froze the assets of many Jewish families. Aghion's parents, whose wealth came from Alexandria, were ruined in the year he was born. Friends helped them rent a Paris flat.[7],[11]
1952
Exile
His father, a communist activist who had left Egypt at the end of the Second World War, fled to Rome in 1952 when he learned he was to be expelled from France after joining a protest against a visiting US general. His mother joined him there for a time.[7],[8]
—
Other
As Egyptian-born Jews with Italian nationality, his parents remained foreigners in France. His mother never sought citizenship, convinced it would be denied, and for years had to renew her residence permit at the prefecture.[7]
Jewish background
Both of Aghion's parents came from Jewish families in Alexandria, Egypt. His father, Raymond, was a banker's son who became a communist activist and later ran a Paris art gallery. His mother, Gaby (born Hanoka), founded the fashion house Chloé. The couple moved to Paris in 1945. New York's Jewish Museum honored his mother in 2023 as a Jewish entrepreneur. The family's Jewish identity had real consequences: after the 1956 Suez war, Egypt froze many Jewish families' assets and the Aghions lost their fortune. We found no source on his own religious practice or how he views his Jewish heritage.[7],[8],[9],[10]
Key dates
August 17, 1956
Born in Paris, the only child of Raymond and Gaby Aghion; his mother had founded the fashion house Chloé in 1952.[1],[7]
1956
After the Suez war, Egypt freezes many Jewish families' assets. His parents lose their family fortune.[7],[11]
1983
Earns a doctorate in mathematical economics from the University of Paris I, after studying mathematics at the École Normale Supérieure de Cachan.[13]
1987
Completes his PhD at Harvard, becomes an assistant professor at MIT, and begins building a model of creative destruction with Peter Howitt.[2],[5],[13]
1990
Becomes deputy chief economist of the European Bank for Reconstruction and Development in London.[13]
1992
Publishes "A Model of Growth Through Creative Destruction" with Howitt in Econometrica.[2],[14],[15]
1996
Becomes professor of economics at University College London.[13]
2002
Returns to Harvard as a professor of economics, later holding the Robert C. Waggoner chair until 2015.[13]
2012
Publishes, with Daron Acemoglu and others, a model showing how policy can steer innovation toward clean technology.[17]
2015
Takes a chair in institutions, innovation and growth at the Collège de France and a professorship at the London School of Economics.[13]
2020
Shares the BBVA Frontiers of Knowledge Award with Howitt and joins INSEAD.[12],[13]
October 13, 2025
Awarded a quarter of the economics prize, shared with Howitt and Joel Mokyr, for the theory of sustained growth through creative destruction.[1],[2],[19]
December 8, 2025
Gives his Nobel lecture, "The Economics of Creative Destruction", at Stockholm University.[6]
Sources
- 1.Philippe Aghion – Facts – 2025 · NobelPrize.org (Nobel Prize Outreach), 2025
- 2.Press release: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025 · The Royal Swedish Academy of Sciences / NobelPrize.org, 2025
- 3.Popular science background: From stagnation to sustained growth · The Royal Swedish Academy of Sciences / NobelPrize.org, 2025
- 4.Scientific background to the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025 · The Committee for the Prize in Economic Sciences, Royal Swedish Academy of Sciences, 2025
- 5.Transcript from an interview with Philippe Aghion (Nobel Week, 6 December 2025) · NobelPrize.org (Nobel Prize Outreach), 2025
- 6.Philippe Aghion – Prize lecture: The Economics of Creative Destruction (page and slides) · NobelPrize.org (Nobel Prize Outreach), 2025
- 7.Qui est Philippe Aghion, le conseiller de Macron devenu prix Nobel d'économie 2025 qui a grandi dans les défilés de mode ? · Vanity Fair France (Jacqueline Remy), 2025
- 8.Gaby Aghion obituary · The Guardian, 2014
- 9.Mood of the moment: Gaby Aghion and the house of Chloé (exhibition, Oct. 13, 2023 – Feb. 18, 2024) · The Jewish Museum, New York, 2023
- 10.Chloé founder Gaby Aghion exhibition at the Jewish Museum · CNN Style, 2023
- 11.Egypt Virtual Jewish History Tour · Jewish Virtual Library (drawing on the Encyclopaedia Judaica)
- 12.Philippe Aghion – Economics of Institutions, Innovation and Growth: Biography and publications · Collège de France, 2025
- 13.Philippe Aghion – Curriculum vitae (September 2023) · Collège de France, 2023
- 14.A Model of Growth Through Creative Destruction (NBER Working Paper 3223) · National Bureau of Economic Research, 1990
- 15.Crossref metadata record: Aghion and Howitt, A Model of Growth Through Creative Destruction, Econometrica 60(2), 1992 · Crossref, 1992
- 16.Crossref record and abstract: Correa, Innovation and competition: An unstable relationship, Journal of Applied Econometrics · Crossref / Journal of Applied Econometrics (Wiley), 2012
- 17.Crossref record and abstract: Acemoglu, Aghion, Bursztyn and Hemous, The Environment and Directed Technical Change, American Economic Review · Crossref / American Economic Association, 2012
- 18.L'économiste Philippe Aghion ou le crépuscule des idoles · AOC media (Gilles Lecerf), 2025
- 19.LSE academic Philippe Aghion awarded Nobel Prize for Economic Sciences · London School of Economics and Political Science, 2025
- 20.World Development Report 2024: The Middle-Income Trap · World Bank, 2024
Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 8 corrections made. How we check
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