Nobel Economics Prize: What are 'natural experiments'?

economictimes.indiatimes.com
3 min read
fairly difficult
The work of David Card, Joshua Angrist & Guido Imbens, the recipients of the Nobel Prize in Economics, is based on 'natural experiments', which are real-life situations that economists study and analyse to determine cause & effect relationships.
The work of David Card Joshua Angrist , and Guido Imbens , who were awarded the Nobel Prize in Economics on Monday, is based on " natural experiments ", an innovative method of empirical research developed in the 1990s.Natural experiments are real-life situations that economists study and analyse to determine cause and effect relationships.In some ways they are similar to clinical trials, in which researchers evaluate the effectiveness of new drugs by separating test and control groups at random."We are replicating something that could be done in a laboratory," says Julien Pinter, a researcher at the University of Minho in Portugal and an economist at BSI Economics.But doing something in the controlled conditions of a laboratory and doing it out in the world are two very different things.Natural experiments differ from therapeutic trials in that -- unlike scientists in the lab -- economists do not control the parameters of the experiment.The scope of these studies is vast: in the cases of thewinners, they covered education, the labour market and immigration.- Challenging preconceptions - For example, Canadian David Card and his American colleague, the late Alan…
AFP
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