Nobel Prize in Economics 2021: Experimental economics in the spotlight

By awarding the 2021 Nobel Prize in Economics to three representatives of experimental economics, D. Card, of Princeton, J. Angrist, of MIT and Imbens of Princeton, the jury not only distinguished three of its best representatives, but also confirmed the rise in power of this discipline, which constitutes it alone a revolution within economic science, calling into question the theoretical models on which it was built, believes Henri-Louis Vedie, Senior Fellow at the Policy Center for the New South (PCNS).

In a policy paper, Vedie, Doctor of State in economics, notes that this experimental economy aims to constitute empirical data, from behavioral experiences, individual or collective. Data, then, analyzed using econometric tools, making it possible to highlight the causal links between one or more factors and their economic impact.

This explains, he says, that the laureates are labor economists, Card and Imbens, or education, Angrist, but also recognized economists.

In 2002, D. Kahneman and V. Smith, who are among the pioneers of this new methodological approach, were honored by the Nobel jury. In 2011, T. Sargent and C. Sims, in 2015 A. Deaton, in 2017 R. Thaler, in 2019 Banerjee, E. Duflo and M. Kremer will join the Nobel laureates in economics, recalls Vedie, noting in the sense that the appointment of Card, Angrist and Imbens is by no means a surprise, however contributing to give a boost to the experimental economy.

With these nominations, the Nobel jury completes an already long list, which began in 2003 with the nomination
by Clive Granger for his “mathematical work allowing us to better understand and establish the meaning of
causality between two facts ”. Remember, too, that one of Angrist’s doctoral students, E. Duflo, received in 2019 the
Nobel Prize in Economics, shared with A. Banerjee and M. Kremer, for different works, but which also fall within the framework of an experimental economy.

As always, the criticisms will relate to the methodology, privileging the natural experience, that is to say on facts, fields, having existed. But, as Marie Claire Villeval, Professor at the University of Lyon, Saint-Etienne, reminds us: “natural experiments pose formidable methodological challenges because, by definition, and unlike laboratory and field experiments, they are rarely reproducible. It is difficult to dispute this assertion.

Similarly, Philippe Askenazy, Professor at the Paris School of Economics, also makes his difference, specifying that “the quest for causality does not mean a science without debate”, which leads to contradictory results. , friable and, therefore, not reproducible. Note that Card, in his work on the minimum wage, reported publication bias.

In 2019, the work of Banerjee, Duflo and Kremer also encountered criticism regarding the methodology of randomization. This will not prevent the 2021 jury from once again distinguishing
experimental work.

Henri-Louis Vedie concludes that with these nominations, the Royal Swedish Academy confirms and consolidates the supremacy of American university research, the three laureates being respectively of Canadian (Card) Israeli (Angrist) and Dutch (Imbens) nationality. their graduate studies in the United States, before teaching in the most prestigious universities of this country.



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