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Nobel in Economics goes to David Card, Joshua Angrist and Guido Imbens

By Jeanna Smialek


David Card has made a career of studying unintended experiments to examine economic questions — like whether raising the minimum wage causes people to lose jobs.


Joshua D. Angrist and Guido W. Imbens have developed research tools that help economists to use real-life situations to test big theories, like how additional education effects earnings.


On Monday, their work earned them the 2021 Nobel Memorial Prize in Economic Sciences.


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


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


The recognition was bittersweet, many economists noted, because much of the research 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. Nobel prizes are not typically awarded posthumously. Despite that note of sadness, the economics profession celebrated the news, crediting the winners for their work in changing the way that labor markets in particular are studied.


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


Card’s work has challenged conventional wisdom in labor economics — including the idea that higher minimum wages led to lower employment. He was a co-author of influential studies on that topic with Kreuger, including one that used the border between New Jersey and Pennsylvania to test the effect of a minimum wage change. Comparing outcomes between the states, the research found that employment at fast food restaurants was not affected by an increase in New Jersey’s minimum wage.


Card has also researched the effect of an influx of immigrants on employment levels among local workers with low education levels — again finding the impact to be minimal — and the effect of school resource levels on student education, which was larger than expected.


Angrist has done work, also with Kreuger, trying to gauge how much benefit people derive from extra years of education. To figure it out, they took advantage of the fact that students born earlier in the year can legally leave school earlier than those born later in the year. Those born earlier did tend to get less education and also earned less later on. The effect of an additional year of education, they estimated, was a 9% increase in income.


That study helped to spur the additional work on research methods that Angrist and Imbens later carried out. That contribution has reshaped the way that researchers think about and analyze natural experiments, according to the Nobel committee.


The pair showed that it is possible to identify a clear effect from an intervention in people’s behavior — like a subsidy that might encourage people to ride bicycles to work — even if a researcher cannot control who takes part in the experiment, and even if the impact varies across individuals. They also came up with a transparent framework for such research that has increased trust in it.


“The challenge, for me, has always been trying to understand, when people do empirical work, what exactly the methodological challenges are,” Imbens said, speaking to the announcement’s news conference via telephone.


Imbens said he was asleep when he received the call from the prize committee — around 2 a.m. — and was “absolutely stunned” to hear the news. He noted that Angrist was the best man at his wedding.


Two American economists affiliated with Stanford, Paul R. Milgrom and Robert B. Wilson, won the 2020 Nobel in economics for improvements to auction theory. Abhijit Banerjee and Esther Duflo of MIT and Michael Kremer of Harvard won in 2019 for their experiment-based research in development economics.


The award, formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, has been given out since 1969.

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