India, Oct. 15 -- Reflecting on the future of humanity, economist Avinash Dixit once wrote: "Will we move to a fifteen-hour work week? Will we be another four or eight times as rich as we are now? Will we colonize the moon or mars? I don't know, and don't much care. I believe that the improvements in institutions and organizations that figure in my dream are much more important than any increases in leisure or any substantial increases in material wealth in today's first world. With good institutions, a good level of economic well-being can be sustained; without them, even great wealth can be fragile."

Why do economists care so much about institutions? Part of the answer comes from the winners of this year's Sveriges Riksbank Prize in Ec...