Ones and Tooze The Economics Revolution and the Nobel Prize
Oct 15, 2021
This discussion dives into the Nobel Prize awarded to economists who transformed economic practices through empirical testing. It highlights innovative approaches, such as applying medical experimental designs to economic policy. The hosts also explore the faltering cap and trade efforts in the U.S. contrasting with Europe's more successful emissions trading scheme. Challenges within Europe's system are examined, including pollution certificate allocation and the impact of rising costs on different socioeconomic groups.
AI Snips
Chapters
Transcript
Episode notes
Credibility Revolution in Economics
- Economics underwent a "credibility revolution" in the 1980s and 90s.
- This revolution aimed to make economics more scientific by applying experimental methods.
Past Economic Practices
- In the past, economists sometimes drew conclusions based on correlations rather than causal relationships.
- One example was a study that seemed to show the death penalty's effectiveness in deterring crime.
Learning from Medical Research
- Economists improved their methods by adopting techniques like randomized controlled trials from medical research.
- Randomization helps isolate the effect of a specific intervention, like cash benefits for expecting mothers.