Meet Simon Johnson, 2024 Winner of Nobel Memorial Prize in Economic Sciences
Johnson: “You have to be looking for something. You have to be dissatisfied. You have to be wanting to take that risk.”
Professor Simon Johnson PhD ’89 of the MIT Sloan School of Management shared the Nobel Memorial Prize in Economic Sciences with Institute Professor Daron Acemoğlu of the Department of Economics
James A. Robinson from the University of Chicago on Oct. 14 for their research on how institutions are created and how they affect prosperity.
The Tech sat down with Johnson to speak about his reactions to winning the Prize, the impact of his research, and his career journey thus far. This interview has been edited and condensed for clarity.
TT: In the spur of the moment, what was your initial reaction to winning the prize? How have you been reflecting on this accomplishment?
I actually had COVID a few days after the Nobel announcement. I think that the universe was sending a message: this is very good, but don’t get carried away. Be humble. Listen to everyone. And see what you can do to be helpful.
TT: What motivated you to pursue economics?
I was born in the north of England. My family didn’t have extensive education. My father attended university for one year while my mother did not attend university at all. My grandfather was always held out as this sort of icon in the family history because he had a PhD in metallurgy. Because of my background, I was really pleased to get into university and delighted to get into office.
Before I went to university, I knew some people who worked for the World Bank and had PhDs in economics. Through them, I could see that there was a very interesting set of questions around economic development. For example, “who was rich, who was poor, and why,” and I was really drawn to that.
So, I was able to leverage my undergraduate performance into a scholarship at MIT as a graduate student, and I got super interested in inflation and runaway inflation.
TT: Why did you choose a career in academia in particular?
I've also always found it interesting to go do economics and policy work on the ground to try to understand what's happening, and then retreat back to academia to write it up and comprehend it. I have done work with the private sector along the way, but I like the fact that in academia, you can step back and have your own views. You don't have to comply with any corporate perspective, and I've been very lucky to be able to do that. So, I think I have gotten that hybrid of both industry and academia experience.
In order to have fully formed thoughts about topics, I have to go do stuff. I have to go interact with people. I've got to try things. I have to fail. I have to then try to make sense of it. For me, I have to struggle with the knowledge, to acquire the knowledge. So, a mix of hands-on industry experience with academia turned out to be the right combination for me.
TT: What keeps you motivated to continue your work after achieving such a high level of recognition?
I recommend that everybody should articulate to themselves a career goal. What is your career ultimate stretch goal? You should do it in your 20s, not give yourself a few more years to see which way your career is going to go. You should tell one person, but only one person, because it should be a stretch goal.
I have a very good friend at Duke, and he was the best man at my wedding. I told him my mad end of career goal would be to become chief economist at the International Monetary Fund (IMF). Through various twists and turns, because the world is a funny place, I ended up getting the job when I was 44. I’d achieved my stretch goal. I told him and thought, “I'm done right?” So, I did that job for a while, and it was a great job. Everything since then has been kind of icing on the cake.
I remain very active and do a lot of research. Last year Daron and I published our book, Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity. We worked on the direction of technological change, where this innovation comes from, how AI could become really beneficial to most people, but also we articulate why we think it might not be so advantageous. There's a straight line from the work that won the Nobel to the book.
I've been incredibly lucky in my career, and the Nobel Prize far exceeded my expectations. I think we'll work on this research for as long as we can. I feel very committed to MIT and MIT's mission. I know that MIT has a very big profile and responsibility in the world because people look to us as for what should be built, how it should be built, and so on.
TT: Who do you think your research has the most direct tangible impact on? Is it like policymakers? Is it the general public with these books, or is it an amalgamation of the two?
When you do research, your first audience is always their colleagues, and you’re trying to influence them and trying to persuade them to think about things a certain way. [The Nobel Prize committee] did a 57 page review of our 25 year-old work, and explained in their assessment that it was influential.
But I think that the point of doing this work is not just to persuade other academics. It's also to link it to more practical solutions, which certainly can be policy, but the book [Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity] is very oriented towards the private sector and the public in general, and trying to get people to think about innovation in a slightly different, or maybe substantially different way.
Ideas from this type of work were taken up in the 2022 CHIPS and Science Act. But they were taken up not just because we recommended them—it helped, but when COVID hit, people were reminded that science really matters. So we're saying, look, do more science, but spend that money in a way and in places around the country that are more likely to create good jobs for more people, so we're connecting the scientific agenda with an economic development agenda for the United States.
TT: Describe to us a specific time when you encountered a setback in your research and how did you overcome them?
Yeah, many. I think when you do empirical research, which is almost entirely what I do, there are many dead ends you don't know exactly. You know, is the data going to be there? You think there's a phenomena that's interesting, but can it really be measured? Are those measures convincing? Does it stand up to statistical analysis, and so on?
I think the major pivot I made in my career was I was very deep into understanding the post-Communist transition. I was a postdoc at Harvard 1989 to 1991 and I worked in Poland, Ukraine, and Russia, and it was extremely interesting. I'm glad I spent time immersed in those places, but I came to realize that if I wanted to succeed academically and also reach broader audiences, I needed to not just know deep things about those specific countries. I needed to branch out and study other areas with shared commonalities. If you want to get tenure at a top place, or if you want to become IMF chief, people look for more general knowledge. I worked on the East Asian financial crisis in 1997 to 1998; that was one way I transitioned. I also worked on some other broader issues, but then I met Daron and Jim, and because I spent all this time looking at weaknesses in Eastern Europe, including corruption, economy, and so on, I understood why institutions could be so important to global economic development.
Together, we looked at the global distribution of diseases, from yellow fever to malaria. Once we connected those pieces, which was a big pivot, that was the breakthrough. This historical take on institutions was important, and I think the fact that these points of speculation didn’t emerge earlier is the reason we had an impact. These ideas were simply not firmly established in mainstream economics. In fact, I don't think it was an idea that was in economics at all, what we proposed at the time.
Pasteur supposedly said, ‘chance favors the prepared mind.’ But I think it's a bit stronger than that. I think you have to be hungry. You have to be looking for something. You have to be dissatisfied. You have to be wanting to take that risk. And I put a lot of time on the first project we did. I didn't have tenure. Some people thought it was a crazy idea, but you have to really stick to it.
TT: Talk about how you balance a thorough study of the trends of history with an understanding of a technologically advanced and dynamic present.
I'm always interested in the backstory. I planned on going to university to study history and economics, and I was really interested in history, but I thought I couldn't get a good job with history, so that didn't seem very practical. I liked math and physics in high school and thus took specialized math, physics, and history subjects. But I didn't figure out what somebody told me that economics would be a good combination of math and physics. Ultimately, during my degree, I switched from history and economics to an economics and politics degree. But I realized that whenever we sit down to study technology policy or ask the question of how do we generate more good jobs, I set out explicitly to try and write modern history and connect it.
In the same book, we were reacting to the 2016 election of Donald Trump, and addressed political, economic and social polarization and COVID. We wanted to understand the logical events and the people who made consequential decisions leading to the present day. In America, people tend to forget history or don't pay attention to it. We have very short memories. So that's something that I’m bringing to readers.
Sometimes, the contents of my writing are not standard knowledge even among highly educated people, and so I use the classroom to share that knowledge, especially with curious MBA students. If I can bring in that historical perspective, I can add to everybody's understanding and then also talk about the recent developments. I've found that, for me, [history and the present] are not two separate things at all. It's actually an essential part of how I understand the now and what might happen next.
TT: Is there advice you would give to your past self or to people in general at MIT?
It would be nice to find some shortcut! It took me 13 years from a PhD to getting tenure. That's a long time, much longer than what we usually expect or want. The funny thing is, I didn't feel stressed. Life was not hard when I initially came to MIT, and work really started to come together. I was enjoying it, you know, I was working with my friends, and I was working very hard, but it was all interesting questions. Some of the work was controversial. People would push back. But that was a lot of fun, too.
We set these tenure clocks, including MIT, but I think as long as you do the work that you're interested in and you care about, and as long as you're being productive in a way that raises your market value. We at Sloan ask junior faculty to do almost nothing that is institution specific, meaning that they should be spending the vast majority of their time on things that are widely marketable to other universities that will raise their value on the academic job market, including publications and teaching competence. But I say to my junior colleagues, and this has been true in my experience, that if you don't get tenure here or if the tenure process is not working out for you, you can get a really good job somewhere else. It took me 13 years, and I became Chief Economist of the IMF a few years after that, and then I won a Nobel Prize!
I think finding what you really enjoy is key, but also considering the factors of lifestyle and pace. It is hard to be an academic, especially for junior academics: it's a tough lifestyle, and it's not for everyone, so you have to choose carefully.
TT: Outside of economics, what other hobbies and interests do you have?
One advice I have for everyone is find a sport or an activity that's a lifetime activity. I play a ridiculous amount of tennis and hang out in a climbing gym, which I go to for my daughter. I also used to run a lot of marathons when I was younger.
Another hobby of mine is reading science fiction. I have a six page memo of science fiction recommendations and rerank my top 20 science fiction books yearly. Outside of science fiction, I mostly read history.