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Answering Causal Questions Using Observational Data - Achievements of the 2021 Nobel Laureates in Economics

Author

Listed:
  • Zoltan Hermann

    (Centre for Economic and Regional Research, Corvinus University of Budapest)

  • Hedvig Horvath

    (University College London)

  • Attila Lindner

    (University College London)

Abstract

In the 1980s and 1990s, the field of labour economics was at the forefront of combining economic theory, high-level econometric methods and new data sources. The 2021 Nobel Prize in Economics was awarded to David Card, Joshua Angrist and Guido Imbens, who played key roles in this research, for their "empirical contributions to labour economics" (Card) and "methodological contributions to the analysis of causality relationships" (Angrist and Imbens), according to the citation. These methodological innovations are now applied in all fields of economics and in many other social science disciplines. Credible empirical analysis has transformed economics from a rather theoretical discipline into a discipline dominated by empirical results, where even the most fundamental theories can be rejected on the basis of empirical results. In this paper, we review the main methodological achievements of this period, also known as the credibility revolution, illustrated by some economic applications.

Suggested Citation

  • Zoltan Hermann & Hedvig Horvath & Attila Lindner, 2022. "Answering Causal Questions Using Observational Data - Achievements of the 2021 Nobel Laureates in Economics," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(1), pages 141-163.
    • Handle: RePEc:mnb:finrev:v:21:y:2022:i:1:p:141-163
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    natural experiment; minimum wage; returns to education; instrumental variables; difference-in-differences; regression discontinuity design;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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