Card Shares Nobel Prize in Economics for Natural Experiments
Three U.S.-based academics won the 2021 Nobel Prize for economics for work using experiments that draw on real-life situations to revolutionize empirical research.
David Card at the University of California Berkeley, Joshua D. Angrist of the Massachusetts Institute of Technology and Guido W. Imbens at Stanford University will share the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, officials of the Royal Swedish Academy of Sciences announced in Stockholm on Monday.
“This year’s economic sciences laureates have demonstrated that many of society’s big questions can be answered,” the academy said on Twitter. “Their solution is to use natural experiments -- situations arising in real life that resemble randomized experiments.”
Angrist and Imbens specialized in developing such methodology, while Card used this approach to address key questions in labor economics.
Research examples cited by the academy include his analysis of the Cuban influx into Miami’s labor market during the 1980s after the country’s then-leader, Fidel Castro, permitted citizens who wanted to leave the island to do so.
Another study mentioned was Card’s paper together with Alan Krueger, the late economist and onetime adviser to President Barack Obama, that compared the effects of minimum-wage policies in fast-food restaurants in Pennsylvania and New Jersey.
Card recognized the contributions of Krueger, who died in 2019.
“I’m sure that if Alan was still with us, he would have been sharing this prize with me,” he said at a press conference hosted by the University of California, Berkeley.
Card said that their work was initially met with skepticism, but eventually influenced the field to embrace “the idea of looking for these pivotal events, or things that have happened, that could potentially inform our theorizing and understanding of the world.”
He also said that the concept that employers have more discretion than previously thought in setting wages has taken off.
Imbens, speaking on Bloomberg Television, also highlighted Krueger’s contributions alongside the winners’ work.
Questioned about the role that certainty about data plays in economic forecasting, he said that’s something he wonders about a lot.
“Traditionally we’ve certainly erred on the side of putting too much faith in the models,” Imbens said. “So a lot of the methods I’ve been developing have been trying to get away from that and trying to make these methods more robust.”
The professor didn’t hear the phone ring when contacted in the early hours of his morning in California about having won the prize.
“I missed the first call -- I got the second one,” he said. “I was sleeping well. I wasn’t expecting this.”
The winners’ work chimes with a focus for the award on real-world applications of the economics discipline in recent years. The 2020 laureates, Paul Milgrom and Robert B. Wilson of Stanford, invented new auction formats used in mobile-phone frequencies, while researchers whose work ranged from inequality to climate change have been among other prior recipients this century.
The winners of the economics prize will share award money of 10 million kronor ($1.1 million), with Card getting half of it and the other two receiving the rest.
The announcement on Monday means 89 men have now won in this category. The economics prize has a particularly poor record of honoring women compared to the other more longstanding Nobel awards, and had never done so until Elinor Ostrom won in 2009. In 2019, Esther Duflo became the second female recipient.
The peace prize given on Friday to journalists Maria Ressa and Dmitry Muratov is the only one this year to have gone to a woman.
Alfred Nobel, the Swedish inventor of dynamite who died in 1896, left much of his fortune for the creation of the annual prizes in physics, chemistry, medicine, peace and literature.
Sweden’s central bank added the prize for economics in 1968. William Nordhaus, Paul Krugman, Amartya Sen and Milton Friedman are among the most well-known recipients of the award.
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