Economics

This Year's Nobel Prize in Economics Is a Victory for Objectivity and Rigor

It's a defense of scientific values that sadly need defending.

|

This week, the Nobel Prize in economics went to David Card, Joshua Angrist, and Guido Imbens, a trio of scholars whose work helped spark what has been called the "credibility revolution." Not only is it a richly deserved award for a trio of innovative economists who helped improve the quality of social science findings, but it is also a sort of quiet rebuff to those on the left who oppose values like "rigor" and "objectivity" in data-gathering entirely. 

The credibility revolution was just what it sounds like: It made economics more credible through the development of novel analytical methods that were both statistically sound and, importantly, easy to understand and explain. 

Angrist coined the phrase in a 2010 paper with Jörn-Steffen Pischke. That paper, which was framed against previous work by UCLA economics professor Edward Leamer, argued that the revolution was a response to a gnawing sense that empirical work in economics had long suffered from a "distressing lack of robustness to changes in key assumptions." The credibility revolution, which began in the 1990s, was about finding ways to better use data and perform experiments that would produce better results. As Angrist and Pischke wrote, "the primary force driving the credibility revolution has been a vigorous push for better and more clearly articulated research designs."

In particular, they helped advance the use of empirical studies of real-world events that served as natural experiments, in which investigators test the effect of an experimental variable by using a real-world control. Natural experiments, of course, can be difficult to interpret; this group's work helped economists understand how and when natural experiments can reveal causality. 

Over the last several decades, their innovative research designs, and other methods derived from them, have made it possible for economists to productively study events that would otherwise be difficult or impossible to study via the randomized controlled experiments that are considered the gold standard in economic research. 

So they didn't just discover some new, interesting information; they developed widely applicable methods that made it possible for us to better study and better understand our world. In many cases, these techniques have replaced older methods that relied primarily on models and statistical analysis that had little or no connection to real-world events. 

It's not that all the findings produced this way are necessarily beyond debate. Among the most famous of Card's experiments was a study looking at how a minimum wage increase affected fast food employment; that study has been hotly debated for decades.  Yet as Alex Tabarrok writes at Marginal Revolution, it was simply a better experimental design than much of what had preceded it. Another influential study by Card found that even an unusually large influx of immigrant labor into Miami did not negatively impact wages or employment amongst the city's less-educated residents; this one, too, has been debated. In both cases, Card's insight was to use a natural experiment—to find data in the real world—and then try to find ways that data could shed light on important public policy questions. 

The award, then, was less about any specific result or conclusion the economists had achieved, and more about their contributions to economic methodology.

It's been suggested that this year's award is a victory for the left, because findings derived from this sort of research have tended to complicate conservative economic assumptions. But I think you can also understand this particular award, with its emphasis on methodological innovation—on producing better research that does a more convincing job of proving what it is we think we know—also serves as an implicit rebuke to a certain form of leftist thinking that's been percolating through various organizations and institutions.

These economists made their field more credible by making it more rigorous, in the sense that they provided better measurement tools, and more objective, in the sense that the results were less dependent on the biases and assumptions of the investigators. These are good things. Indeed, they are such obviously good things that it is almost strange to remark upon them at all. Yet the seemingly obvious proposition that social science should strive, whenever possible, to be more objective and rigorous is now under attack—not only from fringe segments of the left, but from within institutions nominally devoted to sound social science.

The Urban Institute, an influential and highly regarded think tank, recently published a blog post from a staff policy analyst titled "Equitable Research Requires Questioning the Status Quo" in which "rigor" and "objectivity" were listed, without meaningful caveat or qualification, as "harmful research practices." 

The post raised some eyebrows and now contains an editorial note at the top saying that blog posts "represent individual authors' views and not Urban policy," plus a link to a statement by the Institute's president that says: "As an organization, the Urban Institute continuously strives to conduct rigorous, objective research to improve lives and communities. That rigor is a hallmark of what we do." The original post, however, is still up. And even if it doesn't represent an institutional position, it's telling that a staff policy analyst would openly condemn such attributes on an institutional forum. 

Nor is this an isolated case. As Reason contributor Jesse Singal recently noted in his Substack Singal-Minded on the Urban Institute kerfuffle and related incidents, explicit denunciations of objectivity and rigor have become depressingly common in certain liberal circles, and are especially common in the realm of education policy. Inevitably, these denunciations are tied up with weaponized, bad-faith charges of racism, as in a notorious diversity and inclusion training slide given to New York City public school administrators saying that "objectivity" and "worship of the written word" were all traits of white supremacy culture.

Much of this strain of thinking can be traced back to the work of diversity consultant Tema Okun. For a more in-depth look at the widespread influence and serious problems with Okun's work, you should read Matthew Yglesias' bluntly titled Slow Boring Substack post, "Tema Okun's 'White Supremacy Culture' work is bad."

The gist, however, is that she views virtually any sign of logical, ordered thinking as a symptom of white supremacy. Naturally, she provides essentially no real evidence or substantive argument to back up her views, which is probably not all that surprising from someone who appears to think that robust evidentiary standards are bad. Meanwhile, her books and articles have been shared widely amongst left-leaning non-profits and political outfits. Some of those have been groups with softer, more activist-oriented missions. As the Urban Institute post shows, it's been creeping into nominally empirical research organizations as well. 

It's not that no one on the left believes in objectivity and rigor and sound social science, or that those ideas have completely fallen by the wayside. But critics of those qualities view them as "harmful" and in opposition to the left's political goals. Even in left-leaning spaces where you would expect those qualities to be assumed to be beneficial, they are now up for debate. In certain quarters of the left, rigor and objectivity—the qualities that give research credibility—are no longer seen as obviously good. 

Those qualities, however, are what this year's Nobel prize is all about. So not only is this year's economics Nobel an award for a group of economists whose innovations have had an immense impact on the field, but it is also a defense of a set of values that should guide all social science research. 

One might think that these values need no defense, that they speak for themselves—and yet it's clearer than ever that they are under attack, and that they must be explicitly defended. And so, with its award, the Nobel Committee has quietly taken a side in an intra-left argument; it is the right one.

NEXT: Congress Raised the Debt Ceiling Again Without Doing Anything To Fix the $28 Trillion National Debt

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

      1. Hey Guys, I know you read many news comments and posts to earn money online jobs. Some people don’t know how to earn money and are saying to fake it. You trust me. I just started this 4 weeks ago. I’ve got my FIRST check total of $850, pretty cool. I hope you tried it.GYk You don’t need to invest anything. Just click and open the page to click the first statement and check jobs .. ..

        Here what I do………. VISIT HERE

    1. I got $97450 up to now this year working on the online and I’m a full time student. I’AM profited. It’s really cvc simple to know and I’m in order that cheerful that I got some answers regarding it. Here what I do….. Visit Here

    2. Your self-awareness is laudable.

    1. There was a time when the writers at Reason would have been the ones pointing this out and deriding the Nobel committee for it’s clearly political choice.

      But those days have been erased.

    2. Steve Sailer is to immigration policy what Samuel Shenton was to geography.

    3. Yeah, I don’t know a lot about these guys, but when I read stuff like “they helped advance the use of empirical studies of real-world events that served as natural experiments, in which investigators test the effect of an experimental variable by using a real-world control”, my spidey sense gets a tinglin’.

      It is almost inconceivable to me that you can perform an “empirical study of real-world events” and tease out causal variables. I am not saying that surveys or controlled surveys are necessarily more accurate, but the idea that you can look at some historical event and think that the data you have is somehow the totality of possible inputs into the outcome? That is very sus.

      And given that Krugman is on record praising these people, I can almost guarantee you that “Rigorous” is more a PR claim than a legitimate use of the term.

      Again, maybe I’m wrong- since I haven’t researched them deeply- but nothing about the scenario Suderman presents us passes the sniff test.

  1. The prize is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

    It was not one of the prizes established by Nobel in his will. This prize was created in 1968.

    It is not a Nobel Prize. It is wrong and misleading to call it a “Nobel Prize”.

  2. Can see how progressives want to avoid objectivity when evaluating economics.

    1. “[B]ut it is also a sort of quiet rebuff to those on the left who oppose values like “rigor” and “objectivity” in data-gathering entirely.”

      It’s interesting (well, that’s one word for it) how these are the same people who claim to be “the party of science”. While rejecting the scientific method.

      1. Austrian Economics?

  3. In many cases, these techniques have replaced older methods that relied primarily on models and statistical analysis that had little or no connection to real-world events.

    Now do the same for anthropogenic global warming.

  4. Capitalism is freedom and without it communism cannot exist and we are seeing 1st hand that socialism sucks…..In the US who’s ability to create wealth and enhance the standard of living has been the most successful means of creating a well defined middle class and a healthy economy when allowed to function under Constitutional Law as life, liberty and the pursuit of happiness…the private sector is were production takes place, where real jobs exist that allow the taxes to provide for a elected gov by Representation to exist, a gov by We the People….and this experimental social degradation is not going to replace inalienable rights….America 1st and America for Americans is a fact….._UCK JOE BIDEN..ect, ect….

  5. That said, if their studies had shown results that raising the minimum wage caused job losses, they NEVER would have won the prize. NEVER.

    1. That said, if their studies had shown results that raising the minimum wage caused job losses, they NEVER would have won the prize. NEVER.

      Their studies DID show that raising the minimum wage creates job losses. How could it not–that’s what raising the minimum wage actually does.

      They won a ‘Nobel’ for finding a creative way to hide that fact.

      And the ‘libertarians’ at Reason are celebrating that.

  6. “but it is also a sort of quiet rebuff to those on the left who oppose values like “rigor” and “objectivity” in data-gathering entirely. ”

    Spoken like true Austrian economists!

  7. Unfortunate that the article focuses on Card. Angrist and Imbens are very deserving. Card is the political choice and his best known studies are substantially flawed in both design and data collection.

  8. Sh, the central planner’s pipe dream: rigorous, objective, credible economic analysis!

    1. This^^^^^^

  9. Completely wrong.

    This year’s Nobel in Econ rewarded mythology – the idea that human actions can be empirically studied to yield useful laws of future action.

    Humans are not volitionless bits of matter, mindlessly obeying discoverable natural laws.

    Empirical studies are economic history, not economics. At best they serve to produce a narrative about what happened given the unique facts relevant to a time and place in the past. They tell us nothing about what guides human actions in the future.

    There hasn’t been a decent Econ Nobel recipient since Hayek in 1974….

Please to post comments