Daron Acemoglu
Based on Wikipedia: Daron Acemoglu
In 2024, when the Nobel Prize in Economics was announced, the name Daron Acemoglu wasn't a surprise to anyone who follows the field. He had been, quite simply, the most cited economist in the world for the previous decade. What made his journey remarkable wasn't just the destination—it was where it started.
Born in Istanbul in 1967 to Armenian parents, Acemoglu attended an Armenian elementary school where his mother served as principal. His father was a commercial lawyer and lecturer. By the time he was a teenager, he had already developed a fascination with the big questions: Why are some countries rich and others poor? Why do some societies develop democracies while others don't?
He would spend the next four decades trying to answer those questions.
The Wunderkind
Acemoglu's academic trajectory was nothing short of extraordinary. He earned his bachelor's degree in economics from the University of York in 1989, then moved to the London School of Economics, where he completed both a master's degree in econometrics and mathematical economics and a doctorate in economics by 1992. He was twenty-five years old.
His doctoral thesis contained seven chapters. When one of his examiners, James Malcomson, reviewed it, he noted that even the three weakest chapters would have been "more than sufficient for the award of a PhD." The economist Arnold Kling would later call him a wunderkind—the German term for a child prodigy.
After just one year lecturing at the London School of Economics, Acemoglu moved to the Massachusetts Institute of Technology in 1993. He would never leave. By 1998, he had tenure. By 2000, he was a full professor. In 2019, MIT named him an Institute Professor—the highest faculty honor the university bestows. As of that year, he had mentored more than sixty doctoral students, including several who have become prominent economists in their own right.
The Big Question
Most of Acemoglu's research, as he has put it, has been "motivated by trying to understand the sources of poverty." This sounds simple enough. But understanding why some nations prosper while others languish is perhaps the most consequential question in economics—and one of the most contested.
Think about it this way: the average person in the United States earns roughly fifty times what the average person in the Democratic Republic of Congo earns. Why? Is it geography? Climate? Natural resources? Culture? History? Luck?
Acemoglu's answer, developed over decades of collaboration with the political scientist James Robinson and the economist Simon Johnson, is both elegant and provocative: it's institutions.
Institutions Are Everything
When economists talk about institutions, they don't mean buildings or organizations in the everyday sense. They mean the formal and informal rules that govern how a society operates—property rights, contract enforcement, political checks and balances, the rule of law, corruption levels, and so on.
Acemoglu and his collaborators argue that these institutions are the primary determinant of long-term economic success. Countries with what they call "inclusive" institutions—those that spread power and opportunity broadly across society—tend to prosper. Countries with "extractive" institutions—those designed to funnel wealth and power to a narrow elite—tend to stagnate.
This might sound obvious, but it's actually quite radical. It means that geography, culture, and even natural resources matter far less than the rules of the game. It means that a country's destiny isn't determined by where it sits on a map or what lies beneath its soil. It means that human choices—specifically, choices about how to organize society—are what separate rich nations from poor ones.
The Colonial Experiment
How do you prove such a sweeping claim? This is where Acemoglu's most famous work comes in.
In 2001, Acemoglu, Robinson, and Johnson published a paper titled "The Colonial Origins of Comparative Development." It has become, by far, the most cited work in Acemoglu's career, and it's widely considered one of the most influential economics papers of the past several decades.
The paper makes a clever observation. When European powers colonized much of the world, they didn't set up the same institutions everywhere. In places where Europeans settled in large numbers—North America, Australia, New Zealand—they created institutions designed to protect their own property rights and limit the power of the state. In places where they couldn't easily settle, often due to tropical diseases, they created extractive institutions designed to strip resources from the land and the people.
Here's the key insight: those institutions persisted. The extractive institutions Europeans created in colonies where they didn't settle became entrenched, creating a vicious cycle that continued long after independence. The inclusive institutions they created where they did settle laid the groundwork for long-term prosperity.
Acemoglu and his co-authors estimated that differences in institutions explain approximately three-quarters of the income differences across former colonies today. In other words, the choices European colonizers made centuries ago still shape the lives of billions of people.
Why Nations Fail
In 2012, Acemoglu and Robinson brought these ideas to a general audience with their book "Why Nations Fail: The Origins of Power, Prosperity, and Poverty." The book became an international sensation.
The core argument remained the same: institutions matter above all else. But the book expanded the historical canvas, drawing on examples from ancient Rome to the Maya civilization, from medieval Venice to modern-day Zimbabwe. The central claim was bold: economic growth at the technological frontier requires both political stability and what the economist Joseph Schumpeter called "creative destruction"—the constant process by which new innovations replace old ones.
Creative destruction, however, threatens existing power structures. Incumbents—whether kings, monopolists, or bureaucratic elites—have every incentive to block innovations that might undermine their position. Only when institutions constrain these incumbents, forcing them to accept change, can sustained economic growth occur.
This is why, Acemoglu and Robinson argue, the Industrial Revolution began in Great Britain. The English Bill of Rights of 1689 created institutional restraints on the monarchy, limiting its ability to grant monopolies and protect incumbents from competition. This opened the door to the innovations that would transform the world.
The book received lavish praise. Warren Bass, writing in The Washington Post, called it "bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be a bit of a masterpiece."
Not everyone agreed.
The Critics
Bill Gates called the book "a major disappointment," characterizing the analysis as "vague and simplistic." The economist Jeffrey Sachs, writing in Foreign Affairs, argued that Acemoglu and Robinson systematically ignored important factors like domestic politics, geopolitics, technological discoveries, and natural resources.
These criticisms point to a real tension in Acemoglu's work. On one hand, his institutional explanation has enormous explanatory power. It makes sense of otherwise puzzling patterns—why North Korea and South Korea, sharing virtually identical geography and culture, have such different economic outcomes, for instance. On the other hand, focusing so heavily on institutions risks ignoring other factors that clearly matter.
Consider the critique of modernization theory. For decades, many economists and political scientists believed that economic development naturally leads to democracy. As countries get richer, the argument went, their citizens demand more political rights, and authoritarian regimes eventually give way to democratic ones.
Acemoglu and Robinson have challenged this view directly. In their 2008 paper "Income and Democracy," they showed that while there's a strong correlation between income and democracy across countries, once you control for country-specific factors, there's no causal relationship. Rich countries aren't more likely to become democratic; rather, certain underlying factors—particularly institutions—drive both economic development and democratization.
This finding has profound implications. It suggests that economic growth alone won't transform authoritarian regimes into democracies. China's remarkable economic rise, for instance, hasn't led to political liberalization. Without institutional change, Acemoglu's work suggests, it probably won't.
Democracy and Growth
If income doesn't cause democracy, what about the reverse? Does democracy cause economic growth?
Here, Acemoglu's research offers a more optimistic finding. In a series of papers, he and his collaborators have found that democracy does indeed have a significant positive effect on economic output. Democratizations, they estimate, increase gross domestic product per capita by about twenty percent in the long run.
How? Democratic institutions, they argue, contribute to growth by expanding education, improving the capacity of the state to deliver public goods, and encouraging investment. Democracies also tend to have better property rights protections and more constraints on predatory behavior by elites.
This doesn't mean democracy is a magic solution. Some of the fastest-growing economies in recent decades—China, Singapore, South Korea under military rule—have been authoritarian. But Acemoglu's work suggests that over the long run, democratic institutions tend to produce better economic outcomes.
The Narrow Corridor
In 2019, Acemoglu and Robinson published another major book, "The Narrow Corridor: States, Societies, and the Fate of Liberty." This book tackled an even more fundamental question: How do free societies emerge and survive?
Their answer involves a delicate balance. Liberty, they argue, exists in a "narrow corridor" between two dangers. On one side lies despotism—a powerful state that dominates society. On the other lies a "weak state" scenario, where the state is too feeble to protect citizens from violence and exploitation by other actors.
Free societies emerge when the state and society grow in rough balance, each keeping the other in check. The book introduces the concept of the "Red Queen effect," borrowed from Lewis Carroll's "Through the Looking-Glass," where the Red Queen explains to Alice that "it takes all the running you can do, to keep in the same place." Liberty, Acemoglu and Robinson argue, requires continuous effort. The state must constantly adapt to new challenges, and society must constantly develop new capacities to hold the state accountable.
When this balance tips too far in either direction, liberty disappears. A state that outpaces society becomes despotic. A society that outpaces the state descends into chaos or domination by non-state actors.
Labor Markets and Inequality
While institutions and development have dominated Acemoglu's research, he has also made significant contributions to labor economics.
On minimum wages, Acemoglu has challenged conventional economic thinking. Traditional economic theory suggests that minimum wages reduce employment by making it too expensive to hire low-skilled workers. But Acemoglu has argued that minimum wages and unemployment benefits can actually "shift the composition of employment toward high-wage jobs." Because the unregulated labor market tends to create too many low-wage jobs, these regulations can increase average productivity and potentially improve overall welfare. He has also found that minimum wages can increase worker training, as firms invest in making their employees more productive.
On unions, Acemoglu has offered a nuanced view. He and his collaborators have argued that while deunionization in the United States and United Kingdom since the 1980s isn't the underlying cause of rising inequality, it "amplifies the direct effect of skill-biased technical change by removing the wage compression imposed by unions." In other words, technological changes that favor skilled workers have driven inequality, but the decline of unions has made that inequality worse.
Historically, unions played an even more important role. According to Acemoglu and Robinson, unions were crucial in creating democracy, especially in Western Europe, and in maintaining a balance of political power between established business interests and political elites.
The Scandinavian Question
One of Acemoglu's most provocative arguments concerns the Nordic countries. In a 2012 paper with Robinson and Thierry Verdier titled "Can't We All Be More Like Scandinavians?", he asked why the United States doesn't simply adopt the Nordic model of comprehensive social safety nets and lower inequality.
His answer was counterintuitive: the United States can't be like Scandinavia because Scandinavia depends on the United States not being like Scandinavia.
The argument runs like this: The "cutthroat" American system, with its high inequality and weak safety net, generates powerful incentives for entrepreneurship and innovation. These innovations then spread to other countries, including Scandinavia. If the United States adopted Nordic-style policies, it would reduce the global rate of innovation, hurting everyone—including the Scandinavian countries that benefit from American innovations.
Acemoglu later expanded on this argument in a 2015 op-ed for The New York Times, arguing that "if the US increased taxation to Denmark levels, it would reduce rewards for entrepreneurship, with negative consequences for growth and prosperity."
This argument has been controversial. The sociologist Lane Kenworthy has pointed out that American economic growth actually preceded the divergence in policies between the United States and Nordic countries, and that there's no clear relationship between inequality and innovation among developed nations.
Even so, Acemoglu has praised the Scandinavian experience in reducing poverty, creating equal opportunity, and enabling social mobility. His argument isn't that the Nordic model is bad—it's that it might not be universally applicable.
The Challenge of Artificial Intelligence
In recent years, Acemoglu has turned his attention to what may be the defining economic question of our time: What will automation and artificial intelligence do to jobs and wages?
In collaboration with Pascual Restrepo, he has studied how industrial robots have affected employment in the United States. Their findings are sobering. Regions with greater exposure to industrial robots experienced larger declines in employment and modest reductions in wages. The robots, it seems, are taking jobs—and not creating enough new ones to compensate.
In 2023, Acemoglu and Simon Johnson published "Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity." The book offers a historically grounded critique of technological optimism. New technologies, they argue, don't automatically benefit society. Throughout history, the gains from technological change have often flowed to a narrow elite, while workers bore the costs.
This isn't inevitable, though. Acemoglu and Johnson point to the Progressive Era in the United States as a model for how technology can be harnessed for broad social benefit. They propose a series of policy reforms: changing market incentives, breaking up big technology companies, reforming taxes, investing in workers, protecting privacy and data ownership, and taxing digital advertising.
Their view of artificial intelligence is notably skeptical. While many technologists celebrate AI as a revolutionary force for good, Acemoglu and Johnson stress its potential negative impacts on jobs, wages, and democracy. The question, they argue, isn't whether AI will transform society—it's who will benefit from that transformation.
The Nobel
In October 2024, the Royal Swedish Academy of Sciences awarded the Nobel Memorial Prize in Economic Sciences to Acemoglu, Johnson, and Robinson "for studies of how institutions are formed and affect prosperity."
The Nobel committee cited their work on the colonial origins of institutional differences and their broader research on how political and economic institutions shape development. It was a recognition of decades of work arguing that the rules of the game matter more than geography, culture, or natural resources in determining why some nations prosper while others fail.
For Acemoglu, it was the culmination of a journey that began in an Armenian elementary school in Istanbul, where a teenager started wondering why some countries are rich and others poor.
A Personal Life
Acemoglu became a naturalized American citizen. He speaks fluent English and Turkish, and some Armenian. He is married to Asuman Özdağlar, known as Asu, who is herself a professor of electrical engineering and computer science at MIT. Her father, İsmail Özdağlar, served as a minister in the Turkish government. Acemoglu and Özdağlar have collaborated on several academic papers together. They live in Newton, Massachusetts, with their two sons, Arda and Aras.
In surveys of American economists, Acemoglu consistently ranks among the most admired figures in the profession, alongside only Paul Krugman and Gregory Mankiw. According to the Open Syllabus Project, he is one of the three most frequently assigned authors in college economics courses.
None of this would have seemed likely for a child born to Armenian parents in Turkey in 1967, in a country where the Armenian genocide remained—and in many ways still remains—officially denied. But then again, if Acemoglu's research has taught us anything, it's that where you start matters far less than the institutions that shape where you can go.