SVERIGES RIKSBANK PRIZE IN ECONOMIC SCIENCES

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Context: 

The Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 to Daron Acemoglu, Simon Johnson, and James A. Robinson“for studies of how institutions are formed and affect prosperity”

The work of Daron Acemoglu, Simon Johnson, James A. Robinson

The awardees have demonstrated the importance of societal institutions for a country’s prosperity.

Societies with weak legal systems and institutions that take advantage of their citizens don't develop or improve. The Laureates helped us understand that.

Societal institutions

By Societal institutions, the laureates refer to the broad set of rules that govern the behaviour of individuals in a society or a country. 

Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better.

The three laureates have distinguished between inclusive and extractive institutions. 

An inclusive institutional framework is characterised by  the existence of democracy, law and order, protection of property rights, among others.

On the other hand, an extractive institutional framework is characterised by the lack of rule of law, of power being concentrated in the hands of a few, which we call autocracy or dictatorship, and the associated risks of expropriation.

How do these two institutions lead to different results?

The two opposite types of institutional frameworks (inclusive and extractive) lead to completely different incentives for people in an economy or society.

For example, if people have assurance that their property will not be taken away at will, or that their incomes and their profits will be protected for generations, they will work to focus on boosting long-term growth and prosperity. 

But when there is a lack of an inclusive institutional framework, the incentives collapse, undermining longer-term prosperity.

About Nobel Prize in Prize in Economic Sciences

It was formerly known as the Bank of Sweden Prize in Economic Sciences.

In Memory of Alfred Nobel, the Economics Prize was established by the central bank in 1968 as a memorial to the 19th-century Swedish businessman and chemist who invented dynamite. 

The prize is not one of the five Nobel Prizes established by Alfred Nobel's will in 1895. Five Nobel Prizes — medicine, physics, chemistry, literature and peace was established by him.

The Royal Swedish Academy of Sciences, Stockholm, Sweden, awards economic sciences prizes according to the same principles as for the Nobel Prizes that have been awarded since 1901.

Important points:

The prize amount is the same as the Nobel Prize, which is 11 million.

93 individuals have received the prize since 1969.

The first prize in economic sciences was awarded to Ragnar Frisch and Jan Tinbergen in 1969. 

Esther Duflo is the youngest to receive the prize. Abhijit Banerjee, an Indian-American economist, and Esther Duflo, an economist, won the 2019 Nobel Memorial Prize in Economic Sciences for their work on global poverty.

Amartya Sen received the Nobel Prize in Economic Sciences in 1998. He was awarded for his contributions to welfare economics, mostly his work on poverty, famine, and human development. His work influenced how governments and international organisations approach human welfare.

Sources:

EURO NEWS

INDIAN EXPRESS