Imbens (1963) was born in Eindhoven and studied econometrics at Erasmus University. He continued his research career abroad and is currently working at Stanford University. He shares the prize with David Card and Joshua Angrist.
The three laureates conducted research into the labour market: for example, how does the minimum wage or immigration affect employment? According to the Nobel Prize committee, their work has revolutionised empirical work in economic sciences.
Cause and effect
It is sometimes difficult to disentangle cause and effect. Someone who spends longer in education will later have a higher income, but is that because of these studies or because of personal characteristics like talent or perseverance?
Angrist and his late colleague Alan Krueger studied early and late pupils: after their compulsory schooling, one group studied longer than the other. This provided them with a ‘natural experiment’. The result: longer education does result in a higher income.
Krueger was also involved in Card’s research into the minimum wage in the 1990s. In fast food restaurants that always pay the minimum, a rise in the minimum wage had no effect on the number of employees.
Imbens
This is when Imbens entered the scene. Together with Angrist, he tried to answer a new question: how do you know if an ‘intervention’ (mediation or new policy) is useful? Because even then you become enmeshed in a tangle of cause and effect.
Say that you offer a free course; who will do it? And what is the effect of that course? With their approach, known as the instrumental variables method, Imbens and Angrist showed how you can consider self-selection in the analysis of the results.
Tinbergen
The Nobel Prize for Economy was not introduced by Alfred Nobel but by the Swedish central bank ‘in memory’ of Alfred Nobel. This is therefore not officially a Nobel Prize.
Dutch-born Jan Tinbergen was the first to win this prize for economy in 1969 along with the Norwegian Ragnar Frisch. In 1975, Tjalling Koopmans shared it with the Russian Leonid Kantorovitsj. Imbens is the third Dutch winner.
'Great news'
Card won half of the prize, Angrist and Imbens are sharing the other half. This year, the Nobel Prize is worth ten million Swedish krona, or around 985 thousand euros. Outgoing minister Ingrid van Engelshoven tweeted that it was ‘great news’ and a ‘fantastic result’.
