The Swedish Academy of Sciences has awarded this Monday the Canadian David Card (Guelph, 65 years old), the American-Israeli Joshua Angrist (Columbus, Ohio, 61 years old) and the Dutch-American Guido Imbens (Netherlands, 58 years old) with the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel 2021, more commonly known as the Nobel Prize in Economics. The jury recognizes Card for his “empirical contributions in the field of labor economics”, including the one that refutes the general idea that a rise in the minimum wage always leads to job losses, and Angrist and Imbens for their “methodological contributions in the analysis of causal relationships ”. In all three cases, in addition, the Academy values the advances made in the field of so-called natural experiments, those that draw conclusions from situations that arise in real life and that resemble controlled experiments.
“Many of the great issues in social science have to do with cause-and-effect relationships. How does immigration affect wages and employment levels? How can higher education affect a person’s future salary? ”, The members of the jury asked themselves at the press conference in which they announced the names of the winners. “These issues are difficult to resolve because we have nothing to compare with. However, they have shown that it is possible to answer these questions using natural experiments, in which, either due to fortuitous events or due to changes in policies, various groups of people are treated differently ”, they explain.
Unlike in other disciplines, such as medicine, economics researchers cannot conduct controlled clinical trials and are forced to opt for other methods of conducting their research. That’s where natural experiments come into play, which use real-life situations to study impacts on different variables. This approach, in turn, has successfully spread to other branches of the social sciences and has “revolutionized empirical research,” according to the Nobel committee. The studies of the three winners, deepens its president, Peter Fredriksson, “show us that natural experiments are a rich source of knowledge that has resulted in great benefit for society as a whole.”
Minimum wage and labor market
In the case of Card, a regular in the pools of favorites for the Nobel, the Academy places special emphasis on his work on the minimum wage, a highly topical issue: in recent times, several advanced economies, including Spain. The findings of an investigation conducted in the State of New Jersey in the early 1990s “challenged established ideas” by showing, among other things, that increases in the minimum wage “do not necessarily have to lead to job destruction.” , as was thought until then. This work, written in four hands with Alan Krueger, who died two years ago, has been part of the plot ammunition of those who defend greater increases in salary floor on both sides of the Atlantic.
The Canadian economist’s footprint, however, does not stop there. The jury also mentions their studies on the effects of Cuban immigration in Florida in the early eighties, which showed that the salaries of those born in a certain country not only do not have to decrease after the arrival of migrants but may even increase. And that, on the contrary, the remuneration of the immigrants who arrived first can be reduced.
Men and Americans
As usual since the award began, two of the three winners in the 2021 edition have a US passport (Angrist by birth and Imbens by naturalization). To date, more than half of those awarded the Nobel Prize in Economics are nationals of the North American country. In addition, all three teach and research at prestigious universities located in the United States, another constant in the history of the award.
The edition of this year’s Nobel, which closes with the award of the Economics award, has also been characterized by the absence of women among the winners: only one has achieved it, the Philippine journalist Maria Ressa. In the case of the economic discipline, in the more than five decades since its creation, the Nobel has only fallen on two women: the American Elinor Ostrom (who won in 2009) and the French Esther Duflo (who achieved it in 2019 ). The jury chooses each exercise for one or more names out of a universe of “between 250 and 300 clear candidates”, according to the figures handled by Hubert Fromlet, professor at Linnaeus University (Växjö, Sweden).
Although colloquially it is known as the Nobel Prize in Economics, in fact it is not a Nobel as such. Economics was not among the original disciplines to which the prize was awarded annually, since Alfred Nobel himself, its promoter, did not include it among the five chosen categories: Physics, Chemistry, Medicine, Literature and Peace. However, in 1969, almost 70 years after the first award ceremony, the Swedish central bank – considered the oldest in the world – decided to create it, under the name of the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, to celebrate his 300th anniversary.
Beyond the indisputable reputational leap that it represents for the winners, the distinction is endowed with 10 million Swedish crowns (almost one million euros). Half of that amount will go to the professor at the University of Berkeley, who already received the Frontiers of Knowledge Award from the BBVA Foundation in 2014, and the other half will be shared between Angrist and Imbens, who work – respectively – in the Massachusetts Institute of Technology (MIT) and at Stanford University. The award ceremony will be held on December 10 in Stockholm.