Economy

David Card, Joshua Angrist and Guido Imbens win the 2021 Nobel Prize in Economics

David Card has made a career of learning unintended experiments to look at financial questions — like whether or not elevating the minimal wage causes folks to lose jobs.

Joshua D. Angrist and Guido W. Imbens have developed analysis instruments that assist economists use real-life conditions to check large theories, like how further training impacts earnings.

All three winners are primarily based in the United States. Mr. Card, who was born in Canada, works on the University of California, Berkeley. Mr. Angrist, born in the United States, is on the Massachusetts Institute of Technology, and Mr. Imbens, born in the Netherlands, is at Stanford University.

“Sometimes, nature, or policy changes, provide situations that resemble randomized experiments,” stated Peter Fredriksson, chairman of the prize committee. “This year’s laureates have shown that such natural experiments help answer important questions for society.”

The recognition was bittersweet, many economists noted, as a result of a lot of the analysis featured in the prize announcement was co-written by Alan B. Krueger, a Princeton University economist and former White House adviser who died in 2019. The Nobels are not typically awarded posthumously. Despite that be aware of disappointment, the economics career celebrated the information, crediting the winners for his or her work in altering the way in which that labor markets in explicit are studied.

“They ushered in a new phase in labor economics that has now reached all fields of the profession,” Trevon D. Logan, an economics professor at Ohio State, wrote on Twitter shortly after the prize was introduced.

Mr. Card’s work has challenged standard knowledge in labor economics — together with the concept larger minimal wages led to decrease employment. He was a co-author of influential research on that matter with Mr. Krueger, together with one which used the border between New Jersey and Pennsylvania to check the impact of a minimal wage change. Comparing outcomes between the states, the research found that employment at quick meals eating places was not negatively affected by a rise in New Jersey’s minimal wage.

Mr. Card has additionally researched the impact of an inflow of immigrants on employment ranges amongst native employees with low training ranges — once more discovering the impact to be minimal — and the impact of school resource levels on scholar training, which was bigger than anticipated.

“I’m sure that if Alan were still with us, that he would be sharing this prize with me,” Mr. Card stated in a information convention, after recognizing Mr. Krueger’s contributions. He additionally famous that originally, when it got here to the minimal wage research, “quite a few economists were quite skeptical of our results.”

David Neumark, an economist on the University of California, Irvine, who co-wrote a paper contesting Mr. Card and Mr. Krueger’s findings in the minimal wage research, stated he nonetheless thought the work had information points — however added that there was little question that the methodology was essential.

“They’ve all done great work — they’ve changed the way that labor economists do research,” Mr. Neumark stated of the three winners.

Mr. Angrist and Mr. Krueger tried in the early Nineteen Nineties to gauge how a lot profit folks derive from additional years of training. To determine it out, they took benefit of the truth that college students born earlier in the year can legally depart faculty sooner than these born later in the year. Those born earlier tended to get much less training and additionally earned much less in a while. The impact of an extra year of training, they estimated, was a 9 p.c enhance in earnings.

That research helped spur the extra work on analysis strategies that Mr. Angrist and Mr. Imbens later carried out. That contribution has reshaped the way in which researchers take into consideration and analyze pure experiments, in accordance with the Nobel committee.

The pair confirmed that it was doable to determine a transparent impact from an intervention in folks’s habits — like a subsidy which may encourage folks to trip bicycles to work — even when a researcher couldn’t management who took half in the experiment, and even when the impression diversified throughout people. They additionally got here up with a clear framework for such analysis that has elevated belief in it.

“The challenge, for me, has always been trying to understand, when people do empirical work, what exactly the methodological challenges are,” Mr. Imbens stated by way of phone in a information convention for the announcement.

Two American economists affiliated with Stanford, Paul R. Milgrom and Robert B. Wilson, received the 2020 Nobel in economics for enhancements to public sale concept. Abhijit Banerjee and Esther Duflo of M.I.T. and Michael Kremer of Harvard University received in 2019 for his or her experiment-based analysis in improvement economics.

The award, formally referred to as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, has been given out since 1969.

Because the award is introduced in the midnight on the United States’ West Coast, two of this year’s recipients have been woken up by cellphone calls from Sweden informing them of their prize.

Mr. Imbens stated he was asleep when he acquired the decision from the prize committee — round 2 a.m. — and was “absolutely stunned” to listen to the information. He stated he was happy to win it alongside mates, noting that Mr. Angrist was one of the best man at his wedding ceremony.

Mr. Card thought {that a} pal of his — whom he recognized solely as Tim — was pulling a prank on him, he stated.

“But then the phone number actually was a Swedish phone number,” he stated.

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