David Card, Joshua Angrist and Guido Imbens won the economics Nobel this week, not so much for what they discovered, for how they discovered it.
why it matters: whereas fellow award winners Esther Duflo, Abhijit Banerjee and Michael Kremer are renowned for designing experiments to measure the effects of economic interventions, with this year’s winners trying to find natural experiments that shed light on whether economic theory really that’s true.
most famous paper of cards, comparing unemployment in New Jersey and Pennsylvania, Has shown That economic theory was wrong about the minimum wage – that raising it may have little or no effect on unemployment in the real world.
- Other natural experiments found by winners include: lottery numbers in the case of persons received in the draft of the Vietnam War, or – paper He alex tabrok says “one of the most beautiful in economics” – the month in which people were born, which has little but significant effect on how much education they receive.
Bottom-line: If economics has any claim to be a science, it must be false. card, in falsifying at least one economic theory, of course Helped to make his subject a science.