Empirical Strategies in Economics: Illuminating the Path from Cause to Effect
The view that empirical strategies in economics should be transparent and credible now goes almost without saying. The local average treatment effects (LATE) framework for causal inference helped make this so. The LATE theorem tells us for whom particular instrumental variables (IV) and regression discontinuity estimates are valid. This lecture uses several empirical examples, mostly involving charter and exam schools, to highlight the value of LATE. A surprising exclusion restriction, an assumption central to the LATE interpretation of IV estimates, is shown to explain why enrollment at Chicago exam schools reduces student achievement. I also make two broader points: IV exclusion restrictions formalize commitment to clear and consistent explanations of reduced-form causal effects; compelling applications demonstrate the power of simple empirical strategies to generate new causal knowledge.
This is a revised version of my recorded Nobel Memorial Lecture posted December 8, 2021. Many thanks to Jimmy Chin and Vendela Norman for their help preparing this lecture and to Noam Angrist, Hank Farber, Peter Ganong, Guido Imbens, and Parag Pathak for comments on an earlier draft. Thanks also go to my coauthors and Blueprint Labs colleagues, from whom I’ve learned so much over the years. Special thanks are due to my co-laureates, David Card and Guido Imbens, for their guidance and partnership. We three share a debt to our absent friend, Alan Krueger, with whom we collaborated so fruitfully. This lecture incorporates empirical findings from joint work with Atila Abdulkadiroğlu, Sue Dynarski, Bill Evans, Iván Fernández-Val, Tom Kane, Victor Lavy, Yusuke Narita, Parag Pathak, Chris Walters, and Román Zárate. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
The work discussed here was funded in part by the Laura and John Arnold Foundation, the National Science Foundation, and the W.T. Grant Foundation.
Joshua Angrist's daughter teaches in a Boston charter school.