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Tuesday, May 23, 2017

What is "Convincing" Evidence in Modern Economics?

James Heckman and Burton Singer have written an important AER P&P piece on "evidence".  This piece borders on philosophy as it touches on the deep issue of how do we as economists update our beliefs about how the world works.  Put simply;  "what is convincing?".     Towards the end of the article, Heckman makes a nice point about one of his own famous early 1990s AER papers;

"Another example of the abductive process is the work of Donohue and Heckman (1991), who addressed the complex question of whether the 1964 Civil Rights law advanced the economic position of African Americans. Multiple factors were at work at the same time: (i) a tight labor market fueled by the war in Vietnam and policies in the 1960s; (ii) the advancing level of education of African Americans; (iii) the Civil Rights Act and the civil rights movement. Using numerous historical datasets, as well as examining multiple outcomes and clues from newspaper stories and contemporary accounts joined with basic economic analysis, they establish the case for a powerful beneficial role for federal government activism. No single bit of evidence is decisive. It is the ensemble of evidence and the substantiation of additional hypotheses that makes the story compelling."

In this age of the field experiment, how does one take a "clean estimate" of a specific program and combine this with other evidence to tell a compelling story?  Or is the estimate the story?  How do we "aggregate" different pieces of evidence?