MIT labor economist Joshua D. Angrist, whose influential work has enhanced rigorous empirical research in economics, has been named a winner of the 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Angrist shares half the award with Guido Imbens of the Stanford Graduate School of Business; the other half goes to David Card of the University of California at Berkeley. All three scholars have long collaborated to upgrade empirical research in the field.
“I’m overwhelmed,” Angrist told MIT News after being notified about the award this morning. “Everybody lucky enough to win the Nobel Prize is gratified and honored. I’m especially lucky to be sharing this honor with David Card and Guido Imbens.”
Angrist was cited for his work establishing new methods of conducting “natural experiments” in economics — studies using data in which otherwise similar groups of people are separated by crucial variables, allowing researchers to better understand cause and effect in complex social situations.
Natural experiments, as the Nobel citation states, are “a rich source of knowledge. Their research has substantially improved our ability to answer key causal questions, which has been of great benefit to society.” For example, a change in government policy — regarding school districts, health care, wage levels, and more — can create situations in which natural experiments become a logical way of understanding the effects that ensue.
However, drawing robust conclusions from such data is rarely simple, and Angrist has worked extensively to develop the scholarly tools needed to find firm results. The Nobel citation emphasizes the influence of a 1994 paper that Angrist and Imbens co-wrote, “Identification and Estimation of Local Average Treatment Effects,” published in the journal Econometrica. That paper formalizes the idea that the average effect of something — be it a new government policy, wage increase, military service, or educational attainment — is best measured by its impact on people who normally never would have experienced it.
In addition to his methodological work, Angrist has conducted his own empirical research that delves deeply into issues of employment and education, bringing light — and hard data — to matters such as the effects of education and military service on lifetime earnings, and the impact of class size and many kinds of policy experiments on educational outcomes.
“I think it’s great recognition for empirical economics,” Angrist added, about receiving the Nobel Prize. “I think this is further evidence that economics has matured greatly as an empirical discipline. Our work has become better, more convincing, and more relevant, in policy discussions and to families making decisions.”
Angrist also emphasized how beneficial it has been for him to call MIT home for the last quarter-century.
“I have felt very lucky to be working at MIT,” Angrist said. “It’s a wonderful environment. I have the best colleagues any economist could hope to have, and wonderful students. I look forward to teaching class again on Tuesday morning — I’m teaching labor economics at 10:30.”
Forging his own path to success
Angrist, who grew up in Pittsburgh, traveled a slightly winding road to academic success, at least by Nobel standards. He left high school after the 11th grade, having met his graduation requirements, and worked in a state mental hospital before deciding to attend college. Angrist then received a BA in economics from Oberlin College in 1982. After initially starting and then leaving one graduate program in economics, Angrist earned his MA and PhD in economics from Princeton University, in 1987 and 1989, respectively.
After receiving his doctorate, Angrist was an assistant professor at Harvard University for two years and a faculty member at Hebrew University until 1996, when he joined the MIT faculty. Angrist has been the Ford International Professor of Economics at MIT since 2008.
At Princeton, where his principal advisor was economist Orley Ashenfelter, Angrist began conducting the empirical research that has been his hallmark. Angrist’s doctoral thesis examined the effects of compulsory military service in Vietnam on workplace outcomes, finding that it generally lowered cumulative earnings. Card, then at Princeton, also served as one of Angrist’s graduate school advisors.
In 1991, Angrist and the late economist Alan Krueger published a paper on the relationship between education and lifetime earnings that has since appeared in many textbooks as a classic example of a natural experiment. Using varying state laws about the age at which students could drop out of school, Angrist and Krueger examined decades of data, going back to the 1920s, and found that an additional year of education was worth about 7.5 percent more in annual earnings.
Angrist and Imbens continued to collaborate after their seminal 1994 Econometrica paper, co-authoring several other published papers on the methods of empirical research.
“David was a great advisor to me,” Angrist told MIT News. “Guido and I set off on a journey 30 years ago to investigate our ideas and find out what we could learn from natural experiments and instrumental variables.”
And while methodological debates in the discipline have sometimes been heated, Angrist has been steadfast in his support of empiricism. As Card told MIT News in 2013, speaking of Angrist, “One of the secrets of his success is his tenacity.”
Glenn Ellison, the Gregory K. Palm Professor and head of MIT’s Department of Economics, said, “It's an honor to have been Josh's colleague for the past 25 years. Over the past three decades Angrist and Imbens have substantially altered the course of the economics profession. They have changed how economists think about causality, shifted the focus of applied research to pay more and more careful attention to causal effects, and changed the practice of econometrics.”
Ellison added: “Josh has had a tremendous impact on many undergraduate and graduate students over the past quarter-century. He has invested tremendously in teaching as well as research.”
Agustín Rayo, the interim dean of MIT’s School of Humanities, Arts, and Social Sciences, said the school is “delighted and proud to celebrate Joshua Angrist’s economics research today. Josh has had a transformative effect on our ability to establish causal relationships in the real world, allowing us to understand what sorts of interventions would actually be effective in carrying out policy goals. His work on natural experiments has enormously expanded the range of questions that economists can address and answer, leading to insights about many issues in human society. This work embodies the deep commitment in our school, and around the Institute, to the revolutionary potential of basic research. On behalf of the entire school community, I wish him — and his co-winners David Card and Guido Imbens — our warmest congratulations.”
In introductory remarks at an online press conference this morning, MIT Provost Martin A. Schmidt noted that “Professor Angrist’s work examining the effects of real-world economic circumstances and social policies is a proud reminder of MIT’s commitment to bring knowledge to bear on the world’s most pressing issues.”
Cool tools and central research questions
Beyond his primary research, Angrist has served as an enthusiastic advocate of rigorous empirical economics. With Jörn-Steffen Pischke, he has co-authored multiple books about the many methods that can be deployed to conduct natural experiments and extract sharpened, “lab-grade” conclusions from existing datasets.
Angrist has long emphasized that natural experiments and other recently fashioned empirical tools are not ends in themselves. All the newer methods of empirical research, he believes, are best when attached to vital social issues.
“It’s the combination of a cool tool applied to a central question that leads to good research,” Angrist told MIT News in 2013.
School performance is among the questions that has been central to Angrist’s recent research. In 2012, Angrist, along with MIT economists David Autor and Parag Pathak, founded MIT’s School Effectiveness and Inequality Initiative, to study a wide range of questions about educational approaches and outcomes. The initiative was just renamed Blueprint Labs in 2021.
Angrist continues doing research at full speed, and not only about education. One 2020 paper he co-authored turned the empirical lens on economics itself; Angrist and his colleagues found that the portion of papers based on empirical research — as opposed to theory or methodology — has increased by about 20 percentage points since 1990.
Angrist has published over 50 peer-reviewed papers in economics and written dozens of review articles and book chapters. The two books he has written with Pischke are “Mostly Harmless Econometrics” (2009) and “Mastering ’Metrics” (2015). Angrist was elected a fellow of the American Academy of Arts and Sciences in 2006.
Angrist has been widely cited in economics for much of his career, and in recent decades has been increasingly cited in other disciplines. Ellison, a co-author of the 2020 paper on trends in the economics publishing, says that Angrist and his colleagues have “inspired a generation of scholars, not only in economics, but also in education, biostatistics, epidemiology, and political science, to think lucidly and precisely about identifying causal effects in nonlaboratory settings.”
For his part, Angrist told MIT News, “We’re gratified our work has been so widely used. That’s the scholar’s greatest reward. The Nobel Prize is the icing on the cake.”
Angrist is the eighth person to win the award while serving as an MIT faculty member, following Paul Samuelson (1970), Franco Modigliani (1985), Robert Solow (1987), Peter Diamond (2010), Bengt Holmström (2016), and Abhijit Banerjee and Esther Duflo (2019). Twelve MIT alumni have won the Nobel Prize in economics; eight former faculty have also won the award.