OSLO – David Card, Joshua Angrist and Guido Imbens have been awarded this year’s Nobel prize for economics for work that “challenged conventional wisdom.” The trio shared the prize for pioneering work in the use of “natural experiments”.
Natural experiments use real-life situations to work out the impact of government decisions. Prof Card is best known for his study of the impact of minimum wage increases on employment in US states. His findings prompted researchers to review their opinion that such increases always lead to falls in employment.
Economists cannot run lab experiments to test their theories, so have to rely on theoretical models and the examination of complex, real life situations.
Canadian-born Prof Card, who works at University of California, Berkeley, receives half of the 10 million Swedish crowns (£839,000) prize, while Israeli-American Joshua Angrist from MIT and Guido Imbens, a Dutch academic at Stanford University, share the other half.
Their work solved methodological problems to show that precise conclusions about cause and effect can be drawn from natural experiments. – BBC.