Intergenerational Transformation of Empirical Research in Economics

This chapter outlines the evolution of empirical economicsEmpirical economics across three generations. Initially, the conventional microeconometrics, the first generation, relied on observational dataObservational data, utilizing methods like panel dataPanel data methods and instrumental variables to mitigate estimation biases. The second generation, spurred by the credibility revolutionCredibility revolution, pivoted towards social experimentsSocial experiments, with randomized controlled trialsRandomized Controlled Trial (RCT) at the forefront, together with quasi-experimental methods, enhancing causal inferenceCausal inference in policy-making. However, this generation grappled with challenges in reproducibilityReproducibility, practicability, and stakeholder inclusion. The chapter emphasizes the fluid and dynamic progression of empirical economicsEmpirical economics toward the third generation, spotlighting the increasing importance of innovative data and collaborative methodologies. It advocates for a harmonious balance between evidence-based policymakingEvidence-Based Policy Making (EBPM) (EBPM) and policy-based evidence-making (PBEM), underlining the significance of replicability, reproducibility, practicability, stakeholder engagement, ethical considerations, and flexibility in economic research. Furthermore, the chapter speculates on the potential emergence of a new paradigm in micro-empirical research within the next 50 years, possibly moving beyond the current predominant Null Hypothesis Significance Testing (NHST) framework. This shift indicates a transformative phase in the methodologies and perspectives of empirical economic analysis.