Stanford University professor Guido W. Imbens was one of two Bay Area professors who were named Nobel laureates in economics early Monday by the Royal Swedish Academy of Sciences.
Imbens will share half of the Nobel Memorial Prize in Economic Sciences — formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 — with colleague Joshua D. Angrist, of the Massachusetts Institute of Technology, "for their methodological contributions to the analysis of causal relationships."
David Card, of the University of California at Berkeley, won half of the prize "for his empirical contributions to labor economics."
The prize amount that the laureates will share is 10 million Swedish krona, about $1.14 million.
Although the Royal Swedish Academy of Sciences notes on its website that the prize in economics is not a Nobel Prize — in part because it was not established until 1968, 73 years after the creation of the Nobel Prize by Alfred Nobel's will — it is awarded using the same principles as for the Nobel Prizes that have been awarded since 1901 and is commonly referred to as the Nobel prize in economics.
Imbens' and Angrist's work is based on observational studies of situations that arise in real life, Stanford President Marc Tessier-Lavigne said during a virtual news conference at Stanford University on Monday morning.
Their work "has shown how real-world experiments can lead to precise conclusions and answer important questions for society like the effect of new government regulations on broader economic outcomes," he said.
Imbens designed and evaluated economic-policy interventions in areas such as education and labor and his methodology has been used beyond the field of economics. His work has been broadly used by researchers in the social sciences and is applicable to climate change, he said.
Imbens said during the news conference that his methodologies have been applied to research in technology and for understanding the relationships of providing a guaranteed basic income on recipients' ability to continue to work and the effect of military service on future earnings.
He and Angrist, who were colleagues at Harvard University, often talked about their research while doing their laundry at the university laundromat on Saturday mornings. The three to four hours at a time they spent each week set the basic framework for their work, he said.
He noted that research into economics doesn't afford the same opportunities for doing randomized experiments such as ones the Food and Drug Administration monitors routinely for new drugs. His and Angrist's work focuses on methodology that can be applied to real-world policies and problems.
Doing experiments such as looking at the effects of guaranteed basic income are difficult and expensive. But he found a way of looking at the causal relationships that provided answers "by inference."
In one research project to understand the potential effects of a guaranteed basic income on peoples' desire to work, he looked at people who played the lottery in Massachusetts. The 500 people who won received a check for $25,000 annually for 20 years — a scenario that was similar to a guaranteed basic income.
"Clearly, there was some effect on labor supply but it didn't change how they worked all that much," he said. The lottery winners also didn't seem to be happier than those in the study who hadn't won the lottery, he added.
Imbens said he missed the first phone call informing him of the Nobel prize. The second call, which came to his cellphone, woke him.
"I saw the call was from Sweden," he said, but he wondered if it was a hoax. "I did get a little worried that if this is not legitimate, that this is a very elaborate prank," he said.
When he answered and heard the caller had a Swedish accent, he was more convinced it was real, he said.
"I was just shocked. Typically, people are further along in their careers. People often get this (prize) very late. I certainly did not expect to get this anytime soon," he said of Nobel winners.
It is gratifying to receive the prize while his children are still at home and they can celebrate together as a family, he said.
It's already been an exciting week in his household, he said. His wife, Susan Athey, economics of technology professor at the Stanford Graduate School of Business, was voted president elect of the American Economic Association, he said. The couple have collaborated in the past and often debate theories at the breakfast table, he said.
Imbens is Stanford's 20th living Nobel laureate. The university has had 35 Nobel winners in its history, Tessier-Lavigne noted.
Stanford researchers Robert B. Wilson and former student Paul R. Milgrom won last year's Nobel prize in economics for insights into auction theory.
Watch the announcement of this year's prize: