Two MIT professors awarded Nobel Prize in economics. Here's what they studied
Two professors from Massachusetts have been honored with one of the most prestigious awards in the world.
Daron Acemoglu and Simon Johnson, professors at the Massachusetts Institute of Technology, were awarded the Nobel Prize in Economic Sciences Monday.
The economists were recognized alongside James A. Robinson, a professor at the University of Chicago, for their research on differences in prosperity between nations.
In other words, the professors' research provided an explanation for why some countries are rich and some are poor, according to a description from the Royal Swedish Academy of Sciences, by looking at how colonization impacted the institutions set up in different countries.
"I am delighted, it's just a real shock and amazing news," Acemoglu said during a press conference.
Here's what to know.
MIT professors awarded Nobel Prize in Economic Sciences
Two professors from the Massachusetts Institute of Technology were awarded this year's Nobel Prize in Economic Sciences, known formally as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
The Royal Swedish Academy of Sciences named MIT Professors Daron Acemoglu and Simon Johnson, as well as University of Chicago Professor James A. Robinson, the winners of this year's prize for their research on how institutions are formed and affect prosperity.
“Reducing the vast differences in income between countries is one of our time’s greatest challenges," said Jakob Svensson, chair of the Committee for the Prize in Economic Sciences. "The laureates have demonstrated the importance of societal institutions for achieving this."
The professors' research showed that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonization. When governments set up were extractive, it hindered long-term economic progress and set up systems that proved difficult to change versus when governments were set up to share power it led to long-term economic health.
"Their empirical research demonstrates the fundamental importance of the type of political and economic institutions that were introduced during colonialisation," the background information for their win explained. "Their theoretical research has contributed to our understanding of why it is so difficult to reform extractive institutions, while also pointing out some of the circumstances in which this can nevertheless happen."
What is the Nobel Prize in Economics?
The Nobel Memorial Prize in Economic Sciences, which is officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is one of the annual awards given by the Nobel Prize organization.
Swedish inventor Alfred Nobel left his wealth to create a prize that rewards discoveries that have conferred the greatest benefit to humankind.
He initially established the prize to be awarded in the fields of physics, chemistry, physiology or medicine, literature and peace. Sweden's central bank, Sveriges Riksbank, established The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1968.
What do Nobel Prize winners get?
Nobel Prize winners each receive a medal, diploma and monetary prize.
The winners of this year's Nobel Prize in economics will equally share a prize of 11 million Swedish kronor, which is about $1 million USD.