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Noah Smith

Elegant Economic Theories Get Shoved Aside by Data

The number crunchers are taking over the field.
Let's run the numbers.

Let's run the numbers.

Photographer: Haruguchi Yamaguchi/Bloomberg

A number of writers, including my Bloomberg View colleague Justin Fox, have been following the big shift in the economics discipline. Where theorizing once dominated the journals and academia, empirics and data now comprise the majority. Let's hope this leads economists to be more careful about checking their theories against reality. In fact, the empirical revolution is already changing many policy debates, from minimum wages to immigration.

But how does empirical economics work? People in the public need to understand the basics. With all of the empirical econ results being hyped in the press (some of them by yours truly), it’s important to understand the power and the limitations of the research methods involved.