I’d be remiss if I didn’t comment on the winners of this year’s Nobel Prize for Economics, namely David Card, Guido Imbens, and Joshua Angrist. I say that because, as Noah Smith puts it in his Substack blog, this is “the Econ Nobel we were all waiting for.”
Smith makes the case quite clearly, that Card “wanted to make the field of economics more scientific” and did exactly that. In the 1990s and 2000s, Card was the strongest driver of utilizing applied statistics to economic questions so “that economics consists of a set of falsifiable claims about the world we live in, rather than simply a set of thought experiments.” He made economics a science.
Smith elaborates further, discussing such topics as quasi-experimental design. I recommend that you read his post because it does a great job at explaining the importance of this particular Nobel. I say all this because I was a graduate student in the PhD economics program at UC Berkeley in the 1990s and 2000s, and I witnessed it firsthand.
How this happened relates to the “we” that Smith mentions above. The “we” can’t be everyone, or this Nobel prize would have been given to Card much earlier, or to someone else who had been working in this direction from a previous cohort. Instead, the “we” reflects a subset of applied economists who had been in a long-standing struggle with the theoretical economists over primacy in the field.
Prior to the early 2000s, the theoretical economists were very much in charge of the direction of economics. They chose who received tenure, they dominated the journal review boards that decided who and what would be published, and so on. There was and remains still a poetry to what they do, but it wasn’t particularly useful in guiding the decisions of people outside the field. Theoretical economics often was so divorced from reality that it couldn’t even be tested.
The problems this caused showed up in several ways. I remember when Hilary Hoynes and others like her were not offered tenure at first, after already having published multiple times in multiple elite economics journals, making repeated concrete contributions to their fields of expertise (health and program impacts in the case of Hoynes), and advising graduate students trying to find their path much better than their peers did. Why? Because the faculty board at the time claimed she hadn’t contributed enough in terms of theoretical advancements.
This had ramifications for both faculty and students. For faculty, it sent a chill to anyone who had been following a similar path. Could they also perform at an elite level, only to be denied tenure because they didn’t line up with the metrics that the board had decided were important?
For many students, it made them disillusioned with the field of economics and the career path of a professor. Around the time I attended graduate school, the majority of students became uninterested in a teaching career path, in contrast to our recent predecessors.
We loved to conduct research and would have enjoyed advising the next generation of students, but we didn’t want the aggravation and stress associated with academia. So, the majority of us focused our attention on the private sector and on government employers, such as the World Bank, the US Treasury, McKinsey & Company, and the like.
For me personally, Hoynes was my lead advisor. When she was forced to leave, it set me back by a year or more. It was the event that ended my interest in becoming a professor.
But things were in the works back then as well. Card and Imbens directed faculty and student research groups (and were often in the same room because they were both at Berkeley in the early 2000s) to focus their attention on (1) being excellent at econometrics and novel statistical techniques and (2) making sure they were reflecting the real world. They did the latter by cultivating research designs that could identify cause over correlation and that could prove or disprove either theory or stylistic knowledge. They, Hoynes, and others didn’t let interim setbacks deter them from their mission. And slowly but surely they demonstrated the relevance and importance of their vision.
From Card’s group (and my cohorts) came such practical visionaries and contributors as Enrico Moretti, Jesse Rothstein, Laura Giuliano, Philip Oreopolous, Giovanni Peri, and Carlos Dobkin. His subsequent work with Andrea Weber, David Lee (who was my lead PhD advisor), and Zhuan Pei have continued to deepen our understanding of how labor markets actually work and advance techniques in econometrics.
So now, if you happen to have looked at Hoynes’ link, you’ll notice that she is back at Berkeley, and has been for a while. Ultimately, Berkeley figured it out. And so did multiple other economics departments. And now the world knows as well.
I am part of that “we.” Everyone else who wanted economics to evolve, improve, and actually help inform and improve society is part of that “we.” Now that the Nobel has been awarded to Card and others of his ilk, we—and this time I mean “we” in the universal sense—are all better for it.
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