This year’s Nobel Prize in Economics is awarded to David Card, Joshua Angrist, and Guido Imbens, all from the United States (US), for pioneering the use of “natural experiments” to investigate the causal impacts of economic policies and other events.
Natural experiments use real-life events to figure out how things work in the actual world, a method that has expanded to other domains and revolutionized empirical research.
The announcement was made on Monday by the Royal Swedish Academy of Sciences. This is the last prize in the queue of Nobel Prizes of this year. The prize is formally known as the Sveriges Riksbank Prize in Economic Sciences. The winners will split a sum of 10 million Swedish crowns ($1.14 million). The prize honors groundbreaking research that challenged long-held assumptions regarding the consequences of minimum wage rises and waves of immigrant workers.
Card, who was born in Canada, received half of the prize “for his empirical contributions to labor economics,” according to the academy. The other half went to Angrist and Imbens “for their methodological contributions to the analysis of causal linkages.”
Many economists found the award bittersweet because much of the research highlighted in the announcement was co-authored by Alan B. Krueger, a Princeton University economist and former White House adviser who died in 2019. Nobel Prizes are rarely given posthumously. Despite this, they applauded the announcement, praising the awardees for their contributions to improving the way labor markets are researched in particular.
Card’s experiment with co-author Krueger on a minimum wage hike in the US state of New Jersey in the early 1990s prompted academics to reconsider their belief that such increases should always result in job losses.
Card is currently employed at the University of California, Berkeley; Angrist at the Massachusetts Institute of Technology, Cambridge; and Imbens, a native of the Netherlands, is employed at Stanford University. Previous Nobel Prizes in economics have also been dominated by American institutions and this year was no exception.
Talking to the reporters on a call, in Stockholm, Imbens stated, “I was just totally startled to get a phone call, then I was just really pleased to hear the news.” He said that he was so thrilled to join the award with two of his close friends. At his wedding, Angrist served as the best man.
Joshua D. Angrist and Guido W. Imbens have created research tools that enable economists to test major hypotheses in real-world situations, such as how additional education affects incomes. David Card’s experiments in order to answer economic problems like whether raising the minimum wage to lead people to lose their jobs and he has built a career out of investigating such unplanned experiments.
In his testament, Swedish dynamite inventor and wealthy businessman Alfred Nobel established and supported prominent prizes for achievements in science, literature, and peace. They have been given out since 1901, but the economic prize being added in 1969 as a result of a contribution from Sweden’s central bank on its 300th anniversary.
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