From collaborator to commentator, economist Leopoldo Fergusson offers a unique perspective on his work with recent Nobel laureates in economics. Fergusson reflects on their groundbreaking research on institutions, political incentives, and social norms, while providing personal insights into the brilliance and generosity of James Robinson and Daron Acemoglu.
When I accepted the invitation to write about my research with the recent Nobel laureates in economics, I had no idea of the media whirlwind that would follow. As press requests flooded in, I couldn’t help but wonder: if I’m this overwhelmed, how must the laureates themselves be feeling?
This surge of interest highlights a beautiful aspect of academic work: its collaborative nature. The Nobel Prize not only celebrates individual achievements but also recognizes the laureates’ ability to pioneer new research directions for others to explore. It’s in this spirit that I share my experiences working alongside these brilliant minds.
Now, writing about my research with them? Indeed, my joint work with these academics is the most crucial part of my career, but I can’t claim it is the same for them! That’s why I’ve decided to focus on five of the nine articles or working papers I’ve written with the laureates (eight with James Robinson’s participation, two with Daron Acemoglu, and one with Simon Johnson). Additionally, my commentary seeks to show how our joint work fits with their broader contributions for which they have received this much-deserved recognition.
Institutions as the bedrock of economic development
A fundamental reason these academics received the Nobel Prize is their demonstration of the crucial role of institutions in long-term economic development. Institutions, as defined by 1993 fellow Nobel laureate Douglas North, are the “rules of the game” in society, influencing the incentives of all participants, from individuals to corporations and politicians.
Proving this relationship is no simple task. It’s one thing to give medicine to a lab mouse and compare it with one who hasn’t received it. It’s quite another to manipulate countries’ institutions at will to answer this question. However, the authors ingeniously leveraged European colonial expansion as a natural historical experiment.
European colonizers established varied institutional frameworks worldwide: some hierarchical and extractive, others more democratic and inclusive. These institutions endured, profoundly impacting long-term development trajectories. Regions with inclusive institutions consistently achieved greater prosperity.
Moreover, the authors demonstrated that this institutional factor outweighs other traditional explanations of comparative development, such as geography or culture. This finding is encouraging: since institutions are human constructs, they can be changed— though not without challenge.
This groundbreaking work paved the way for numerous studies using innovative strategies to further confirm the crucial role of institutions in economic outcomes. While I haven’t directly studied institutional quality’s effect on economic performance with the laureates, my joint research with Acemoglu and Johnson revealed how population growth, without corresponding productivity gains, can spark social conflicts—even violent ones. This underscores the need for robust institutions capable of managing such conflicts, especially as we face global challenges like climate change that will test our governance systems.
The complexities of institutional change
The Nobel Prize also acknowledges these scholars’ insights into the mechanics of institutional change and the obstacles to reform. The crux of the problem? Institutions that hinder economic development often benefit powerful groups who resist change.
In a study with Robinson, Ragnar Torvik, and Juan Vargas, we explored why some rulers lack incentives to monopolize force legitimately throughout their territory. We developed a theory akin to an auto mechanic’s dilemma: if they permanently fix your car, you won’t need their services again. Applying this to Colombia, we posited that politicians seen as ideal for combating insurgency faced perverse incentives to prolong the conflict, lest they lose their electoral advantage.
Another project, “The Weak State Trap” with Robinson and Carlos Molina, examined how clientelism—the exchange of political support for personal benefits—erodes state capacity. Weak state capacity creates fertile ground for clientelism, resulting in a vicious cycle: a weak state encourages clientelist politics, which in turn prevents the state from developing the capacity to deliver public goods effectively.
These studies highlight two critical aspects of the authors’ theories: the necessity of capable states for sustaining inclusive institutions, and the difficulty of building such capacity due to adverse political incentives. The takeaway? To construct strong institutions, we must consider political motivations, favoring systems that distribute power broadly to avoid perverse equilibria.
In another study with Acemoglu, Robinson, Dario Romero, and Vargas, we analyzed Colombia’s “false positives” scandal—the killing of civilians falsely presented as guerrillas. This tragedy stemmed from a misguided attempt to consolidate state control, introducing perverse incentives without bolstering complementary institutions. It illustrates another challenge in institution-building: the need for multiple, harmoniously functioning dimensions. Strengthening military capacity without reinforcing judicial oversight is unlikely to yield a capable, legitimate state that exercises power equitably and respects citizens’ rights.
The Power of Social Norms and Culture
Recent work with Robinson and José Guerra explores social norms and culture, areas Acemoglu and Robinson have increasingly focused on. We examined the Colombian social norm “no sea sapo” (literally “don’t be a toad”), which discourages reporting or intervening in wrongdoing.
Using a modified dictator game, we allowed the “dictator” to deter observers with the phrase “mind your own business.” This simple addition dramatically altered outcomes, leading to less frequent and severe punishments and encouraging preemptive selfishness among distributors. The level of selfishness matched scenarios without observers, suggesting this social norm effectively negates the benefits of social living. This social norm leads individuals to live in society as if they were not!
Fascinatingly, many participants verbally endorsed fairness and punishment of injustice, while disagreeing with the “don’t be a toad” norm. Yet, in practice, they anticipated and followed it. We term this an “antisocial norm,” where social pressure forces adherence despite personal moral judgments, highlighting how deeply rooted cultural norms can lead to suboptimal social outcomes.
A personal reflection
I can’t conclude without expressing my profound gratitude for the serendipitous events that led me to these extraordinary scholars: taking a summer course at the Universidad de los Andes with Jim. not only that, but also that it occurred just a year before Jim spent his academic sabbatical year at Los Andes; not only that, but that during that sabbatical year, I got a job as a junior researcher at that university; and I could go on. Had any one of them been different, I might not be sharing this story today.
In Jim, I found a mentor with genuine and contagious curiosity and openness to students’ ideas. I cherish his passion for Colombia, not just personally but on behalf of many Colombians and, particularly, many generations at Universidad de los Andes. When the university awarded him an honorary doctorate, Jim reviewed his academic path and emotionally reflected that perhaps his greatest academic commitment has been to Colombia.
Jim not only opened the door to our academic relationship but also to friendship. I fondly remember from almost the first moment we met until today, including the meetings in a pub in Cambridge, where we discussed ideas along with my Colombian friends and PhD classmates at that time. With a curious fact: I was there solely for friendship and ideas, as I have little interest in beer!
As for Daron, his legendary generosity to students persists despite his many commitments. His MIT students created a global map showing how his ideas have spread through not only his books and articles but also through his many students worldwide. They have all testified to his generosity, intellect, and impressive capacity for work and productivity. Some joke that Daron has been cloned; he must be more than one person.
Working on my thesis under Daron’s guidance was eye-opening. His feedback was always incisive, pushing me to improve, and it was astonishingly quick. I must confess a small sin: once, I delayed sharing my progress for a few hours, just to feel like I was working at a mortal’s pace!
When you share an idea with Jim, you know you’ll have an enthusiastic response. He’ll take your half-baked ideas and see the most exciting side, perhaps one you hadn’t even anticipated. Sharing an idea with Daron implies receiving questions that force you to rethink, go beyond, and discover new, unsuspected angles.
I hope to continue sharing many ideas with them and admiring the countless ones emerging from their brilliant minds. Their Nobel Prize is richly deserved, and I am incredibly fortunate to have worked with and learned from them both.
Author Disclosure: the author reports no conflicts of interest. You can read our disclosure policy here.
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