Trio wins Nobel economics prize

Three US-based academics on Monday won the Nobel Economics Prize for research on the labour market using “natural experiments”, or observational studies, that have revolutionised empirical research in the field, the jury said.

Canadian-American David Card, Israeli-American Joshua Angrist and Dutch-American Guido Imbens shared the prize for providing “new insights about the labour market” and showing “what conclusions about cause and effect can be drawn from natural experiments,” the Nobel committee said in a statement.

The Economics Prize wrapped up a male-dominated 2021 Nobel season which saw a total of 12 men win prizes and only one woman.

Card, a Canadian-born professor at the University of California in Berkeley, won half of the 10-million-kronor ($1.1 million, one million euro) prize for work focused on the labour market effects of minimum wages, immigration and education.  

In natural experiments, researchers study the result of chance events or policy changes on groups of people, unlike other experiments where scientists have control over their subjects.

Card’s studies from the early 1990s showed for example that raising the minimum wage does not necessarily lead to fewer jobs. 

“We now know that the incomes of people who were born in a country can benefit from new immigration, while people who immigrated at an earlier time risk being negatively affected. We have also realised that resources in schools are far more important for students’ future labour market success than was previously thought,” the Nobel committee said.

However, data from a natural experiment are difficult to interpret. 

For their work helping to solve that methodological problem, the other half of the prize went jointly to Angrist, 61, a professor at the Massachusetts Institute of Technology (MIT), and Imbens, a 58-year-old professor at Stanford.

In research they conducted in the mid-1990s, they demonstrated how “precise conclusions about cause and effect can be drawn.”

Revolutionising work

The framework they developed has been widely adopted by researchers who work with observational data.

“By clarifying the assumptions necessary to establish a causal relationship, their framework has also increased the transparency – and thus credibility – of empirical research,” the committee said.

“I was absolutely stunned to get a telephone call,” Imbens told reporters during a phone interview following the announcement.

‘False Nobel’

Last year, the honour went to US economists Paul Milgrom and Robert Wilson for their work on theories of auctions as well as inventing new auction formats.

The Economics Prize, officially the Sveriges Riksbank (Sweden’s central bank) Prize in Economic Sciences in Memory of Alfred Nobel, was the only prize not among the original five set out by the will of Alfred Nobel, who died in 1896.