Oct 13, 2015

Data and theory: lessons from Angus Deaton

The Nobel to Deaton is a prize to applied economics, serious empirical research; something that does not make you look as a disruptive genius, but more as incremental builder of knowledge, which in the long run can slowly change things for the better. This is the core message of this prize. But this focus on empirics is not to confuse with atheoretical data mining. Data must be interpreted and often you can say one thing and its opposite by just looking at data. Data require thinking, empirical analysis requires theoretical reasoning; and the two are complementary.

In the end, there is no substitute for careful evaluation of the chain of evidence and reasoning by people who have the experience and expertise in the field. The demand that experiments be theory-driven is, of course, no guarantee of success, though the lack of it is close to a guarantee of failure.
This is the methodological message of this lecture, that technique is never a substitute for the business of doing economics.

Angus Deaton


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