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Not the OP, but there's no such thing as proper experimental setup in economics (because there can't be). That's why using economic/econometric modelling for ca
by mziel 11y ago
Not the OP, but there's no such thing as proper experimental setup in economics (because there can't be). That's why using economic/econometric modelling for causal inference is the holy grail of the field.
Some approaches are:
- structural models (google Pearl)
- instrumental variables (google Angrist)
- threatofrain 11y agoThanks for the Judea Pearl reference.
- pratyushag 11y agoNot an expert but wouldn't randomized controlled trials (part of many economics papers) count as proper experimental setup?
- MrApathy 11y agoYes, many economics papers are at the intersection of economics and psychology with a focus on human behavior. One of the broad assumptions of economics is that individuals are largely rational, but controlled experiments sometimes show that people don't always act in their best interest. But at a macro level, there are no controlled experiments. We can look toward "natural" experiments (e.g., wages and the labor rate of two border towns, where one is in a state that has raised minimum wage and the other has not), but there's nothing like the gold standard double blind randomized trial that you'd find in a drug study.