Damn the pandemic! It also kept Nobel’s gossip down.
Every fall since 1969, the year the first Nobel Prize for economics was awarded, October is when the gossip starts buzzing: Who’s going to win it this year? The Department of Economics at Princeton University used to stage the betting pool. Its faculty members have won 23 of them. But this fall, professors around the world were working from home, and the prize was barely audible.
Still, it was the Oscar for the Nobel, the greatest, mind. No other award for economics falls remotely on the tree of academic status. Which economic sub-feature will the Nobel Committee consider important this time? Will this be a macro year? No, that was 2018. Maybe environmental economics? Will the winner be an American, a European, an African, an Asian? Don’t think that nobody counts.
This fall had none of that fizz. Still, no one was particularly surprised last Monday, when the Nobel Committee announced that the 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel had been awarded to David Card, at the University of California, Berkeley in Canada. Born was a labor economist. For his “empirical contributions to labor economics”. Or that the other half of the prize was won by two of his contemporary colleagues, Joshua Angrist (MIT) and Guido Imbens (Stanford), for “methodological contributions to the analysis of causal relationships”.
“I think” Prof. “It was really a question of when, not what,” says Card alumnus Dwayne Benjamin, now a deputy provost and economics professor at the University of Toronto.
Which everyone is now duly celebrating. Pro. Card has given 50 media interviews this week alone. However, it is very bad about the discussed blanket of COVID-19. Pro. Card may be the most fundamentally progressive economist to receive the Nobel Prize in decades. His victory is already taking place under the skin of his enemies.
David Card — strong, modest, spectacled, straight, ready laughing, gold silk Windsor-knotted tie, blue blazer from Berkeley last Monday for announcing Zoom — grew up on a dairy farm outside Guelph, Ont. He used to wake up in high school every morning at 5:30 to help his father milk 30 cows. (His mother, in his 80s, still works on the farm with David’s brother.) He then went to Queen’s University to become a physicist, but “I wasn’t going to be a very good physicist. “
Instead, he was lured to Princeton by Orly Ashenfelter, one of the first labor economists, who was encouraged to use empirical methods. Pro. Ashenfelter was fond of quoting a famous line the wealth of Nations, in which Adam Smith notes that employers rarely meet without discussing how they can keep wages low. This set the quietly subversive tone of the Aschenfelter team.
Pro. Aschenfelter wanted his new graduate student to investigate whether training programs for disadvantaged workers or unemployed people had any effect. There were many such programs in Canada, but it was extremely difficult to study them to any clear conclusion – until the young team arranged the study to look like a scientific experiment, and used computers and Prof. Card used “fancyier econometric statistical methods” to perform the analysis. The data he collected. US Department of Labor Was impressed enough to offer some funding.
A few years later, David Card saw an opportunity for a scathing investigation. From may to In September of 1980, Fidel Castro had kicked 125,000 Cubans out of his country, forcing him to make his way by boat to Miami – the famous Mariel Boatlift. Pro. Card realized that he was observing a rare natural scientific experiment that economists rarely get to study in messy real life: the effects of immigrant arrivals on job opportunities for local workers living in Miami. could evaluate. NS marlitos Miami’s unskilled labor force increased by 7 percent.
But after studying the data from several statistical angles, Prof. Card discovered newcomers Miami had zero impact on either the wages or unemployment rate of comparable workers. This was not what one had expected classical economic theory to be, and the economist attracted heavy criticism: the Mariel paper was for many years the most cited paper in economics. Prof in Business. Some of the card’s contestants are still trying to prove 40 years later that they misinterpreted the data.
A few years later, he struck up again, this time with his career-long collaborator, Alan Kruger, another Aschenfelter retainer at Princeton. (The dashing Prof. Krueger was later named chairman of Barack Obama’s White House Council of Economic Advisors. He died by suicide in 2019, shocking the entire profession.)
Card and Kruger, as they were known, loved to read a lot, and liberally. For example, Prof. Krueger had a subscription to The New England Journal of Medicine, hardly standard economist fare. They observed that on April 1, 1992, New Jersey planned to increase its minimum wage from US$4.25 to US$5.05 per hour; Meanwhile, a few miles on the other side of the border with Pennsylvania, the minimum wage was living at US$4.25.
This was another naturally occurring experiment, the rarest of all things in real-life economic situations, an implicit control group. Young geniuses set out to find any data they could. They surveyed employees and owners at 410 fast-food restaurants in New Jersey and eastern Pennsylvania before the pay increase, then later. Then he started paying attention to the data.
Here again, classical economic theory predicted what seemed obvious and logical: raise the minimum wage and the jobs would disappear. (Its The same argument was made by Doug Ford recently opposing raising the minimum wage in Ontario.) But cards and Krueger, try as you might – and they were pretty harsh – found (hello, Mr. Ford. Are you still there?) no indication that the increase in the minimum wage has reduced employment. In fact, under certain real-life situations, the promotion of the minimum wage has actually increased employment.
Another commandment of sacred economic dogma had fallen. Pro. “The so-called conventional wisdom in many of these areas is actually much more complex or ambiguous than is sometimes pretended to be the case in undergraduate textbooks,” says Card.
This time the knife turned out to be more sharp. The minimum wage, after all, was one of the first pieces of personal economic relief to be passed as a US federal law. Pro. Card remembers the day after the study’s publication as “probably … the worst day of my life”.
He went to the mailroom of Princeton’s Department of Economics and found that each mail slot contained the same envelope. “I thought, This is weird. And this is a letter from a group that lobbies on behalf of the restaurant industry. And they asked this guy to do a study to poke at me and Allen. Then they did the whole thing. Sent a copy to everyone in the economics profession.”
Pro. The card says that The New York Times has not called him for direct comment since winning the Nobel last Monday. “But they called the guy who wrote the report that criticized Kruger and my work, and quoted him.”
Data-hungry labor economists Prof. Ashenfelter’s fun bands were shaking up the increasingly unstable foundations of his profession. Professor Emeritus at UBC’s Vancouver School of Economics and Prof. Craig Riedel, a frequent collaborator of Cards, recalls the pre-Card Time of Darkness, “there was a firm belief that economics was a field that did not lend itself to experimental methods.” . “I remember being told as an undergrad that economics was akin to astronomy: you can’t keep one planet stationary when you study the motions of other planets.”
Economists were talking about theory and logic rather than data and results. Armed with increasing computer power and ingenious new baskets of data, Card & Co. began what is now known, and is often cited, as the reliability revolution in economics. “With careful attention to research design and causal inference that has spread from labor economics to many other subfields in economics,” Prof. Riedel says.
Pro. There are other explanations for the traditional desire of economists to buy the status quo, with cards being, of course, irritating wild cards. “I think that’s partly because most economists were from wealthy families, and had never worked as teenagers, and had no experience in real jobs in the market,” he says. “Not all economists, of course. Many labor economists come from somewhat more regular backgrounds. But a large number of economists never really do anything. They don’t really have much exposure to real-world situations.”
He still asks his graduate students – famous for the number of skilled economists he has mentored – about their family backgrounds, who are the offspring of doctors and professors. “Many, many people who get PhDs have their parents who have PhDs,” said Prof. Card found. “It’s part of this intergenerational lack of mobility. The people above are going to come from above.”
A dairy farm in Ontario saved her from a similar fate. “Yeah,” he says, “I’ve probably milked more cows than most economists.”
Pro. Card and Kruger were famous for breaking rules and working overnight at the Princeton Economics Library every fortnight. “Being a professor, especially of labor economics, is not very glamorous,” Prof. Cards say. “I’ve probably done 65” Hours of the week in my entire life. We spend a lot of time with computer programs. It doesn’t look like Robertson Davis in the high table. “
“Economics is still a…