A Nobel prize for an economics revolution
Economics is something you usually learn about inside of a classroom. You read textbooks and theories to try to understand what's happening in the world. At least that's how it used to be. Thirty years ago some seminal economic papers kicked off what is sometimes called "the credibility revolution," or the empirical revolution in economics.
Economists David Card and his late colleague Alan Krueger used real-life experiences to test out economic theories and see how the world really worked, most famously in "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania." The paper explored whether a minimum wage hike in New Jersey killed jobs by comparing the state's experience to neighboring Pennsylvania, which had not raised its minimum wage. Their conclusion that the minimum wage hike did not kill jobs was a bombshell for the economics world, challenging an orthodoxy that had dominated the field for decades.
Joshua Angrist and Guido Imbens built on Card and Krueger's work, giving economists more sophisticated statistical techniques to decipher cause and effect and gather evidence about the world. David, Joshua and Guido will share the Nobel prize. Alan Krueger, who died in 2019, would have surely shared the prize had he lived.
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