Economics Nobel honors 'natural experiments'

The 2021 Nobel prize in economics was awarded Monday to three economists for pioneering "natural experiments" to show real-world impacts.

Joshua Angrist, David Card and Guido Imbens have researched areas from minimum wage increases to migration from Castro-era Cuba.

Imbens, a professor at Stanford University, said the call caught him off guard.

IMBENS: "It did seem like a very legitimate call. As I realized that this might be a big deal."

Imbens was delighted to share the prize with two of his good friends. Joshua Angrist, now at MIT, was best man at his wedding.

When the pair were both at Harvard, Imbens said, they spent Saturday mornings at the laundromat, where their talks laid the basis for their life's work. Angrist said it was then, thirty years ago that they began to mull a problem.

ANGRIST: "We started thinking about this, is how to come up with strategies that provide evidence that's as good as evidence that you get if you were able to run a randomized trial."

One experiment by David Card, now at Berkley, on the impact on the fast-food sector of a minimum wage increase in New Jersey upended conventional wisdom in economics that such increases should always lead to job losses. He said the research builds slowly.

CARD: "So at any one point in time, a particular piece of research may have some influence, but a lot of times it takes many, many years and a lot of rethinking of how that evidence actually either confirmed or contradicted existing wisdom."

His work on the topic has been used as empirical evidence to push for legislation, including by the Biden administration, for a $15 minimum wage in the United States.