Yahoo Finance David Card, Joshua D Angrist and Guido W Imbens awarded Nobel Economics prize 2021
Watch: Card, Angrist, Imbens win 2021 Nobel economics prize
David Card, Joshua D Angrist and Guido W Imbens have been announced this year’s joint winners of the Nobel prize for economics.
The Sveriges Riksbank Prize in Economic Sciences was awarded for "drawing conclusions from unintended experiments".
Card's findings were lauded “for his empirical contributions to labour economics”, while Angrist and Imbens were for “for their methodological contributions to the analysis of causal relationships”.
The award of 10 million SEK (£838,399) was announced slightly late because of the difficulty in contacting some of the winners. Card will take home half, while Imbens and Angrist will split the other half.
The Nobel Institute said the winners, who all work for US institutions, "have provided us with new insights about the labour market and shown what conclusions about cause and effect can be drawn from natural experiments.
"Their approach has spread to other fields and revolutionised empirical research," it added.
The research has "shown that natural experiments can be used to answer central questions for society, such as how minimum wages and immigration affect the labour market.
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"They have also clarified exactly which conclusions about cause and effect can be drawn using this research approach. Together, they have revolutionised empirical research in the economic sciences," the institute said.
David Card's research
Using natural experiments, Card analysed the labour market effects of minimum wages, immigration and education.
The Nobel Institute said his studies from the early 1990s challenged conventional wisdom, leading to new analyses and additional insights.
The results showed, among other things, that increasing 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.
Joshua Angrist and Guido Imbens' research
Data from a natural experiment are difficult to interpret. For example, extending compulsory education by a year for one group of students (but not another) will not affect everyone in that group in the same way.
Some students would have kept studying anyway and, for them, the value of education is often not representative of the entire group.
So, is it even possible to draw any conclusions about the effect of an extra year in school?
In the mid-1990s, Angrist and Imbens solved this methodological problem, demonstrating how precise conclusions about cause and effect can be drawn from natural experiments.
Peter Fredriksson, chair of the Economic Sciences Prize Committee, said: “Card’s studies of core questions for society and Angrist and Imbens’ methodological contributions have shown that natural experiments are a rich source of knowledge. Their research has substantially improved our ability to answer key causal questions, which has been of great benefit to society."
The triple award means takes the total of men that have won the top economics prize to 89. A woman had not won the prize until Elinor Ostrom brought it home in 2009 — the second woman to win it was Esther Duflo in 2019.
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