Professor Joel Mokyr won the Nobel Prize in Economics in 2025 “for having identified the prerequisites for sustained growth through technological progress”.

Why Study The Past?

When you think about history, you might wonder: why should we care how people lived and how their economies worked dozens—or even hundreds—of years ago? Humans are the only species on Earth that studies its own history. I have a very smart dog who can do all kinds of tricks, but she has no idea that there were dogs a 100 years ago or what they looked like. She mostly cares about her next treat!

Some people think history can help us predict the future, but I am skeptical. In my view, almost any sentence that starts with “history teaches us…” is probably wrong. The past does not repeat itself—especially today, when technology is changing so quickly and dramatically. I study the past because I think it is much richer and more diverse than the present, and because I want to understand how we got to where we are.

Imagine a biologist who studied only the animals alive right now—they would miss most of the species that ever lived on Earth. The same is true for economies. Economies have taken many different forms (Figure 1), and they have grown, or failed to grow, for many different reasons [1, 2]. Studying economic history sharpens our thinking and helps us see possibilities we might never notice if we looked only at the economy we live in today.

What Is Economic Growth Really About?

One of the most important ideas in economics is economic growth. When economists talk about growth, they usually mean that a country produces more goods and services over time. Economic growth is often measured using a calculation called the gross domestic product (GDP). To compare GDP across different years fairly, economists adjust it to remove the effects of changing prices (inflation), so the numbers reflect changes in how much an economy produces rather than changes in prices. If the GDP rises, economists say the economy has grown. Since ~1800, many countries began a long-term trend of GDP-per-person growth—often ~1%-2% a year on average, and as more countries joined this pattern, the world’s total GDP grew larger over time (Figure 1A).

But there is an important point to remember: the GDP does not always reflect how good life is for the average person [3]. First, think about anesthesia—the medicine that puts you to sleep during surgery so you do not feel pain. Anesthesia was invented in the mid-1800s, and it barely changed the GDP because it was only one of many goods and services produced. But imagine having surgery without it! The invention of anesthesia made life dramatically better, even if it hardly shows up in GDP statistics. Another example happens to be one of my favorites: music. I am a great lover of classical music. In 1850, if you wanted to hear classical music, you usually had to go to a concert—or learn to play an instrument yourself. Today, for just a few dollars a month, I can use a music platform to listen to almost any piece ever recorded, anytime I want. That is an incredible improvement in everyday life, even though easy music availability may not increase the GDP very much.

On the other hand, some things can make the GDP rise without making life better. Wars are a clear example. During World War II, the U.S. economy grew quickly because the government produced enormous numbers of tanks, airplanes, and submarines (Figure 2A). But ordinary people were not living any better than before. As another example, if people work longer days and never take weekends off, the GDP might increase—but would people be happier or healthier (Figure 2B)?

When I think about economic growth, I try to look beyond GDP and ask: What kinds of changes actually improve human wellbeing, meaning better health, more comfort, more safety, and more enjoyment in daily life? The GDP is a useful number, but it is often an incomplete way of understanding how the economy influences quality of life over time.

What Drives Economic Growth?

As I see it, economic growth is largely driven by innovation—finding better ways to produce goods and services, or creating entirely new ones. There are three common types of innovation [4]. Process innovation means making the same thing using fewer resources (less time, labor, energy, or materials), so it becomes cheaper or easier to produce. Product innovation means creating something new that did not exist before. Quality innovation means improving an existing product so that it works better, lasts longer, or is safer and more enjoyable to use.

Cars are a good example (Figure 3). Before the 1800s, cars did not exist—people traveled on foot, on animals, or in carriages pulled by animals such as horses. In 1885, the first modern car was built by the German engineer Karl Benz. That was a product innovation: a brand-new kind of machine. Early cars were made in small numbers, mostly by hand. After cars were invented, people worked to make them cheaper and faster to build. In the early 1900s, companies began producing cars in much larger numbers using more standardized parts. A famous example is Henry Ford’s Model T, which was introduced in 1908 and was mostly made by machines instead of humans. Finally, if you compare a car from 1960 with a modern car today, you can see quality innovation: modern cars include features like automatic braking, other safety features, and better sound systems, and they do not need to be repaired as often.

Facing The Dark Side Of Innovation

While innovation often improves human wellbeing, it can also create harmful side effects [5]. For example, over the past 10–15 years, some technological changes concentrated extreme wealth in the hands of a small number of people who lead very large companies—more money than many of these individuals, or even their families, could reasonably spend. This wealth can be used to influence politics, which means political power can become concentrated in too few hands. That is a serious risk for democratic societies.

Second, the rise of social media deepened political divisions. Social media companies make more money the more clicks they get. To get clicks, they must often take extreme positions and come up with fake information. Since so many people get their news from social media (e.g., 70% of U.S. citizens), this has led to more people voting for representatives who hold extreme views and who encourage their voters to hate the “other side”. This is phenomenon is happening everywhere, and it fuels social conflict.

Another challenge is that technological change is accelerating. That means our institutions—the rules, organizations, and social systems that help societies function —must adapt quickly to new realities created by powerful tools such as social media and artificial intelligence. But institutions can take decades to change, and I do not know whether our institutions will adjust fast enough to keep up with technology.

Innovating Our Way Out Of Challenges

Climate change and the growing tendency of some people to have fewer children while also living longer, which means that a smaller number of working-age people may eventually need to support a growing number of older adults. In both cases, I think the solution will be technological innovation.

At the 2025 Nobel Prize ceremonies I attended in Stockholm, the chemistry prize went to scientists whose breakthrough could help absorb enormous amounts of a greenhouse gas called carbon dioxide from the atmosphere and store it fairly easily and cheaply. This could be a huge step toward addressing global warming.

For the aging population problem, we might need to replace workers with robots and automation. Robots could help in nursing homes, deliver groceries to people who cannot walk, and provide some medical services currently provided by human doctors. Technology has solved enormous problems in the past, and while I am not bold enough to say we will definitely solve future problems just because we solved past ones, I can say this: we can solve them using technological innovation.

I want to end with a piece of advice that may sound trivial, but is surprisingly effective: do not do stupid things. If more people—and more countries—follow that rule, we would be better able to use technological innovation to drive economic growth that increases human wellbeing, and to address the big challenges of our time.

Glossary

Economies: ↑ Ways people work, make things, trade, and use money to get what they need and want.

Economic Growth: ↑ When a country makes more goods and services over time. Economic growth does not always improve human wellbeing.

Good and Services: ↑ Goods are physical things you can buy (like food or clothes), and services are things people do for you (like washing your car or fixing your cellphone).

Gross Domestic Product (GDP): ↑ A number obtained by adding up the total value of all the goods and services a country produces in a year.

Process Innovation: ↑ A new way to make something using less time, money, or materials.

Product Innovation: ↑ Creating a brand-new product that did not exist before.

Quality Innovation: ↑ Improving an existing product, for example by making it work better, last longer, or be safer for use.

Institutions: ↑ Social structures like laws, governments, and social rules that help society function well.

Acknowledgments

I wish to thank Or Raphael for conducting the interview which served as the basis for this paper, and for assisting with the creation of this paper, Iris Gat for providing the figures, and Susan Debad for copyediting the manuscript.

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Conflict of Interest

The author(s) declared that this work was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.