A childhood among artists
Philippe Mario Aghion was born in Paris on 17 August 1956. Both his parents came from Jewish families in Alexandria, Egypt, part of the large, cosmopolitan Jewish community that flourished there before the mid-twentieth century. His mother, Gaby Aghion, born Gabrielle Hanoka, moved to Paris with her childhood sweetheart Raymond Aghion in the 1940s and in 1952 founded the fashion house Chloé, becoming a pioneer of luxury ready-to-wear; she later hired a young Karl Lagerfeld as its designer. His father ran an art gallery on the Boulevard Saint-Germain.
The family lived first in the Latin Quarter and later in Neuilly-sur-Seine, and Philippe grew up, as he later recalled, surrounded by artists, Lagerfeld among them. It was a household built by people who had arrived in France and created something new, a fitting background for an economist who would spend his life studying how new firms and new ideas displace old ones.
A mathematician turned economist
Aghion trained first as a mathematician, graduating from the mathematics section of the École normale supérieure de Cachan (now ENS Paris-Saclay). He took advanced degrees in mathematical economics at the Université Paris I Panthéon-Sorbonne, then went to Harvard, where he earned a Ph.D. in economics in 1987 with a dissertation on industrial organisation supervised by Jerry Green and Eric Maskin.
His career moved between the United States, Britain and France. He began as an assistant professor at the Massachusetts Institute of Technology in 1987, returned to France as a researcher at the national research centre CNRS in 1989, and in 1990 became deputy chief economist of the European Bank for Reconstruction and Development, created to help the former communist countries of Eastern Europe build market economies. He then taught at Nuffield College, Oxford, and University College London, returned to Harvard in 2002, and in 2015 was appointed both to the London School of Economics and to a chair at the Collège de France. Since 2020 he has also held a chair in innovation and growth at INSEAD.
Creative destruction, made precise
The Austrian economist Joseph Schumpeter had argued in the 1940s that capitalism advances through creative destruction: new products and methods sweep away old ones. The idea was powerful but hard to test. In 1992 Aghion and the Canadian economist Peter Howitt published a mathematical model that turned it into a working tool. In their model, firms invest in research to produce a better product or a cheaper process. A successful innovator leaps to the top of the market and earns profits, often protected by a patent, until another firm comes up with something better and pushes it off the ladder.
That temporary reward is what drives investment in research, and the constant turnover is what drives growth. The Nobel committee noted that their 1992 paper was the first macroeconomic model of creative destruction with general equilibrium, meaning that production, research, savings and financial markets were analysed together rather than one at a time. The model also showed that a free market will not automatically get the amount of research right. Because each innovation builds on the last, society gains more from research than the innovating firm captures, which argues for public support; but a firm that only slightly improves on a rival can still capture all its profits, which can lead to too much duplicative effort. Which force wins depends on the market and the moment.
Competition, firms and the real economy
What made the framework so influential was that it could be tested against data on real firms. Below the surface of steady national growth, companies are constantly being born and dying; in the United States, the Nobel committee noted, more than ten per cent of firms close every year and as many are founded. Aghion and his colleagues used the model to study which firms innovate, and why: small entrants or large incumbents, firms at the technological frontier or those catching up.
One of his best-known findings, from work in the 2000s with colleagues including Rachel Griffith, is an inverted-U relationship between competition and innovation. Too little competition lets dominant firms relax; too much leaves firms without the profits that reward innovation. Aghion has used this to argue that when incumbents grow too dominant they can block entrants and slow growth for everyone, and that strong competition policy is a pro-innovation policy. He has also studied the so-called middle-income trap: why countries that grow fast by copying and investing can stall as they near the technological frontier unless they shift to genuine innovation.
From theory to policy
Aghion has always wanted his ideas to be used. In 2010 he led a group of international experts that advised the French government on university autonomy and governance and on campuses of excellence. In 2016 the United Nations Secretary-General appointed him to an expert group advising a high-level commission on health employment and economic growth, and in 2021 he joined a World Bank and International Monetary Fund advisory group on sustainable and inclusive recovery. In 2024 he co-chaired, with Anne Bouverot, France’s Commission on Artificial Intelligence, whose report, presented to President Emmanuel Macron in March 2024, set out 25 recommendations for the country’s approach to AI.
The policy lessons the Nobel committee drew from his work are now widely discussed: support research where private incentives fall short; stop dominant companies from shutting out challengers; and, because creative destruction destroys jobs as well as creating them, protect workers rather than particular jobs, for example through flexicurity systems that combine labour-market flexibility with strong support for people who lose work. He has also argued that social mobility matters for growth, because a society loses inventors when a child’s career is decided by their parents. With co-authors he has applied the same framework to climate change, studying how carbon pricing and research support can steer innovation toward clean technologies.
Universities, transition and Europe
Aghion has long argued that Europe needs institutions built for innovation, not only for catching up. His time at the European Bank for Reconstruction and Development, in the early 1990s, put him at the centre of the effort to rebuild the economies of the former communist countries, and his later research on the middle-income trap drew on that experience: the policies that help a country imitate and invest are not the ones that help it invent.
Universities were a natural focus. The 2010 report he led for the French Ministry of Higher Education compared university autonomy across countries and, drawing on Harvard, MIT, Oxford and Cambridge while acknowledging that no single model fits all, recommended balanced governance: a board of directors made up mostly of outside members that would appoint a president with real powers, alongside an academic senate as a forum for scientific and teaching proposals. The report fed into France’s programme of campuses of excellence. For Aghion, the lesson ran through all his work: research universities, open competition and mobility for talented people are the infrastructure of growth.
Books and teaching
Aghion has written or edited many of the field’s standard texts, including Endogenous Growth Theory (1998) and The Economics of Growth (2009) with Howitt, Competition and Growth (2006) with Rachel Griffith, and the Handbook of Economic Growth with Steven Durlauf. In 2021 he published, with Céline Antonin and Simon Bunel, The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations, which brought his ideas to general readers and addressed inequality, the environment and the role of the state.
He has been a Fellow of the American Academy of Arts and Sciences since 2009, served as president of the European Economic Association in 2017, and has been an editor of the Annual Review of Economics since 2018. France made him a Knight of the Legion of Honour in 2012.
Nobel Prize
In October 2025 the Royal Swedish Academy of Sciences awarded half of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel jointly to Aghion and Howitt “for the theory of sustained growth through creative destruction.” The other half went to the economic historian Joel Mokyr. Six years earlier Aghion and Howitt had shared the BBVA Foundation Frontiers of Knowledge Award in Economics for the same body of work.
Not everyone agrees with him. Some critics, including writers for the French outlet AOC, have faulted him for techno-optimism and for relying on GDP growth as the main measure of progress in an age of environmental crisis. Aghion has also been open about his politics: he backed François Hollande for president in 2012 and Emmanuel Macron in 2017, and in October 2026 he warned of the economic cost a populist government would bring.
Legacy
Aghion’s legacy is a way of seeing the economy as a living process rather than a steady machine: firms rising and falling, ideas replacing ideas, and growth emerging from that turmoil. The Aghion–Howitt model is now taught in graduate economics programmes around the world and underlies much modern research on innovation, competition and productivity.
For ordinary people the payoff is practical. Debates about breaking the grip of dominant technology companies, about how much governments should spend on research, about retraining workers displaced by automation and AI, and about steering innovation toward clean energy all draw on questions his work made precise. The son of two Alexandrian Jews who built new lives in Paris has given the world one of its clearest accounts of how newcomers, and new ideas, make everyone richer.
Sources & further reading
Philippe Aghion, Wikipedia · Popular information: From stagnation to sustained growth, NobelPrize.org · Press release: The Prize in Economic Sciences 2025, NobelPrize.org · Gaby Aghion, Historical Society of Jews from Egypt · Report « IA : notre ambition pour la France », CASD · Researched from the sources above and checked against them. Spotted an error? Tell us.
A life of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.