MIT economist awarded Nobel Memorial Prize in Economic Sciences
Professor Joshua Angrist honored for ‘methodological contributions to analysis of causal relationships’
Joshua Angrist, a professor of economics, was awarded the 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel on Monday, the Royal Swedish Academy of Sciences announced. Angrist joined the MIT faculty in 1996, and has served as the Ford Professor of Economics at MIT since 2008. He shares the prize with David Card of University of California, Berkeley, and Guido Imbens of Stanford University.
The group was recognized for their insights “about the labour market” and for showing “what conclusions about cause and effect can be drawn from natural experiments,” according to the press release from the Nobel Prize Committee. The press release went on to say that the economists’ approach “has spread to other fields and revolutionized empirical research.”
Questions of cause and effect in the social sciences are often difficult to answer, due to a lack of experiments with control groups. Questions about, for example, the effect of immigration on pay and employment, or the effect of education on future income — questions this year’s prize recipients worked to answer — can’t be answered by investigating an identical scenario with less immigration or less education.
In answering these types of questions, economists utilize natural experiments; natural experiments are real-life situations wherein “chance events or policy changes result in groups of people being treated differently.” For example, Card studied employment in fast food establishments in New Jersey and Pennsylvania in 1993, on the heels of a minimum wage hike in New Jersey; this policy change resulted in the creation of a “trial group” (New Jersey) and a “control group” (Pennsylvania).
Angrist’s work deals with interpreting the data from these natural experiments. The Prize citation emphasizes the influence of a 1994 paper that Angrist and Imbens co-wrote, according to MIT News. The paper, published in Econometrica, formalizes the idea that the average effect of something — like a government policy, wage hike, or educational attainment — is best measured by its impact on people who normally never would have experienced it.
Angrist has also conducted empirical research; in 1990, Angrist leveraged the Vietnam-era draft lottery to estimate the effect of military service on lifetime earnings, according to a Nobel Committee report. In another study in 1991, Angrist, working with late Princeton University economist Alan Krueger, studied the relationship between education and lifetime earnings.
MIT hosted an online press briefing with Angrist on Monday via Zoom; Provost Martin Schmidt PhD ’88 opened the briefing with congratulatory remarks, after which Angrist offered some reflections and fielded questions from various news outlets.
Angrist began by acknowledging the legacy of past MIT economics laureates, stating that he was “humbled and gratified to be part of” a list that “includes people like [Paul] Samuelson and [Robert] Solow from decades ago, and then more recently, Esther Duflo and Abhijit Banerjee.”
He then gave special mention to Alan Krueger, who “was a big career contributor” to his and Card’s work; he also mentioned Professors Parag Pathak and David Autor. Pathak, Autor, and Angrist are co-directors of Blueprint Labs at MIT, a research lab focused on problems in economics, healthcare, and the workforce.
In answering questions from journalists, Angrist spoke about his early education, saying that he had “sort of a winding road,” having left high school early and working for a while before attending college. After completing his bachelor’s degree, he moved to Israel, becoming a citizen and starting graduate studies. He left his graduate studies and served two years in the Israeli Army before moving back to the US to complete his studies at Princeton.
He also spoke about his work, and his impression of its impact on applied microeconomics as a whole, stating that his and Imbens’ methods “are designed to allow econometricians and similar academic analysts” to answer questions about “individual decisions” (like where to go to school, where to go to work, or what type of job to work at) and “the consequences of those decisions.”
He gave an example of a natural experiment in his recent work on charter schools and public education policy, pointing to the question “do people who go to charter schools learn more than they would if they had gone to a traditional public school?”; he noted that “initially we had sort of an idea and then that became a framework for the use of statistical and econometric methods that mimic the sort of research design that you would get in a clinical trial without actually having to do the trial.”
He said that “you can’t always do that, but often you can do that using natural variation” — for example, “some applicants to charter schools are admitted by lottery, and that turns out to be the key. There’s an element of random assignment, and the question is how do you extract the random assignment from a very elaborate process which is not nearly as well controlled as it would be if it was a clinical trial.”
Angrist was also asked about his thoughts on the relevance of econometrics in the long term, considering advances in data science and AI, to which he responded that he wasn’t sure “that those tools are revolutionizing econometrics as much as some of the other fields where they’re used.” He stated that the key to “learning about causal effects is uncovering some sort of research strategy,” and that “just having a lot of data” is “often not the most important thing.” Thus, while “a lot of the tools of contemporary big data” might be “supporting players” in econometrics, they’re “rarely central.”
Towards the end of the conference, Angrist was asked to offer words of advice of inspiration, to which he responded that “the most important thing is you have to love economics.” Economics was “a whole way of looking at the world that just resonated with me, and I never stopped loving it.”
Angrist has been a fellow of the American Academy of Arts and Sciences since 2006, and serves as a research associate at the National Bureau of Economic Research. He received a BA in economics from Oberlin in 1982, and a master’s and a PhD in economics from Princeton.
Angrist is the eighth MIT faculty member to win the Nobel Prize in Economic Sciences.