The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category goes in this seventh edition to Briton Richard Blundell and Canadian David Card for “their contributions to empirical microeconomics,” in the words of the jury’s citation. “Motivated by important empirical questions, they developed and estimated appropriate econometric models, making significant methodological contributions in the process. Both are known for their attention to institutional detail, careful and innovative research design, rigorous application of econometric tools, and dispassionate reporting of results.”
17 February, 2015
Manuel Arellano, Professor of Econometrics at the Banco de España’s Center for Monetary and Financial Studies (CEMFI), and secretary to the prize jury, remarked that the two men “have developed data analysis models and methods to explain the economic behavior of individuals, households and firms around key issues like savings or employment; models and methods that support policy-making in these areas informed by rigorously arrived at evidence.” Their approaches, moreover, share common strands, with Card focusing on narrow contexts in pursuit of robust causal inferences, and Blundell working with larger models that generate insights, for instance, into the welfare implications of an increase in taxes.
Arellano refers to Blundell as “a master at juggling data, economic theory and econometric methods,” while Card he describes as “a pioneer in the use of the technique of natural experiments.” Natural experiments are empirical studies in which the subjects exposed to the experimental and control conditions are determined by nature or by other factors outside the control of the investigators, although the process resembles random assignment.
The work of the new economics laureates has shaped policy design in such varied areas as taxation, welfare and pension reform, the labor market, inequality and product market regulation.
'They have not given us access to large databases, but also allowed us to study them in an efficient way'.
Blundell talked yesterday about how new technologies have transformed his field of study: “They have not given us access to large databases, but also allowed us to study them in an efficient way using new statistical and econometric methods that give us a window on human behavior; how people respond to particular policies and events that affect them.”
As regards the content of their research, both have been drawn towards issues of a social nature. Blundell has examined the influence of wages and income on households’ consumption and the hours worked by their earning members. His findings have shed new light on tax and welfare policy effects on economic activity. “As a researcher, one of my leading aspirations is to influence public policies, to make them better, and I think we have achieved that with some of our work, both in the United Kingdom and elsewhere.” Indeed he became an economist, he says, to “improve people’s lives. I thought if we can increase understanding of human behavior, we can use that knowledge to design better policies that can make the world a better place.”
Card, meantime, has delved into core labor-market issues such as trade union bargaining, inequality, minimum wages, unemployment benefits and welfare programs. He has also looked at the effects of immigration on local employment and at the relationship between educational level and wage disparity.
He started out studying chemistry, physics and mathematics, and only picked up an economics textbook, he now recalls, to help out his girlfriend at the time. And he quickly realised that not only was he gripped, but that what he was reading had implications stretching to agriculture, which as the son of farmers was a subject close to his heart. On being informed of the award, he declared himself honored to belong to such a distinguished roll of winners and confident that his work on minimum wages, immigration or returns to education is relevant and useful for the policy-making process.
He is currently engaged in a natural experiment on returns to education, which analyzes whether streaming fourth and fifth-grade pupils by performance affects their results and, more specifically, how the measure impacts on students of lower means.
Economics, Finance and Management jury
The jury in this category was chaired by Eric S. Maskin, 2007 Nobel Laureate in Economics and Adams University Professor at Harvard University (United States), with Manuel Arellano, Professor of Econometrics in the Center for Monetary and Financial Studies (Cemfi) (Spain), acting as secretary. Remaining members were Pinelopi Koujianou Goldberg, William K. Lanman, Jr. Professor of Economics at Yale University (United States), Andreu Mas-Colell, BBVA Foundation Frontiers of Knowledge Laureate in Economics (2009) and Professor of Economics at Pompeu Fabra University (Spain), Hélène Rey, Professor of Economics at London Business School (United Kingdom), Jean Tirole, Nobel Prize in Economics (2014) and BBVA Foundation Frontiers of Knowledge Award in Economics (2008), Chairman of the Foundation Jean-Jacques Laffont at Toulouse School of Economics (TSE) and Scientific Director of Toulouse University’s Institute for Industrial Economics (France), and Fabrizio Zilibotti, professor in the Department of Economics at the University of Zurich (Switzerland).
Briton Angus Deaton, a leader in the measurement of wellbeing and poverty, takes the BBVA Foundation Frontiers of Knowledge Award in Economics, Finance and Management
21 February, 2012