David Card, Joshua D. Angrist and Guido W. Imbes is honored for his contributions to labor economics and causal relations.
But in recent decades, the work of three winners has helped economists make better use of natural experiments, in which some people are randomly subjected to a policy while others are not.
“His research has greatly improved our ability to answer important causal questions, which has been very beneficial to society,” said Peter Frederickson, chairman of the Economic Sciences Prize Committee.
Many economists believe that various policy responses to the COVID-19 pandemic have led to a large number of natural experiments that could be used to explore causal relationships that would otherwise have been difficult to investigate.
Mr. Card was born in Guelph, Canada in 1956, and is now a professor at the University of California, Berkeley; Mr. Angrist was born in 1960 in Columbus, Ohio and is now a professor at the Massachusetts Institute of Technology; And Mr. Imbens was born in 1963 in Eindhoven, Netherlands and is a professor at Stanford University.
In presenting the award to Mr Card, the Royal Swedish Academy of Sciences cited a 1993 paper he co-authored with Alan Krueger that challenged the traditional view that raising the minimum wage would lead to a decline in employment. .
The natural experiment in question was an increase in the minimum wage in New Jersey from $4.25 to $5.05 an hour. The two economists surveyed more than 400 restaurants in the state and neighboring eastern Pennsylvania, but found that where there was an increase in the minimum wage, there was no decline in employment.
Similar experiments have allowed economists to answer questions about the effect of education on income, a topic that Mr. Card has researched throughout his academic career.
Natural experiments differ from laboratory experiments that physicists use to test their theories in that economists cannot choose the subjects to participate.
The Royal Swedish Academy of Sciences said that Messrs Angrist and Imbans had advanced the understanding of the conditions under which natural experiments can help establish causal links.
“They showed that it is possible to estimate a well-defined causal effect of an intervention, even when the researcher cannot control who participates in the intervention,” said Eva Mork, professor of economics at Uppsala University in Sweden.
In a 1994 paper, two economists established the theory that the effect of a policy should be judged by those who would not otherwise follow the path it had taken them. In the case of an investigation into the effect of the Vietnam draft on future earnings, only draft earnings were relevant, excluding volunteer income.
The three economists worked on the papers together, and Mr Imbens said Mr Angrist was the best man at his marriage.
“I was thrilled to hear the news, especially to hear that I got to share it with Josh Angrist and David Card,” said Mr. “They’re both very good friends of mine.”
write to Paul Hannon at [email protected]