Tuesday, July 05, 2011

The Good Old Days

This WSJ Article about rising river shipping costs due to silt buildup in muddy rivers (caused by recent flooding) made me think back to the good old 1990s when "natural experiments" offered economists exogenous variation for testing various hypotheses. Now that we are in the golden age of the field experiment, will any young researcher use this exogenous variation in costs of shipments along the river to write a new paper on monopoly power and pricing in the short run?   What other novel tests can be done using this "God Given" gift?

God has given us a new Instrumental variable and somebody out there should be ambitious enough to use it!

Say what you want about the 1990s "natural experiments" era but at least it didn't cause any concern about Hawthorne effects. I have wondered whether the U.S is losing jobs because of the rampant field experiments being run.  Firms don't want to be faxed fake resumes from research nerds posing as job seekers.  One way to avoid these costs is to move to a less "field experiment" friendly location. So forget tax havens and pollution havens, I claim the U.S is losing some jobs because some firms are seeking "field experiment free" zones.