James J. Heckman, Awarded Nobel Prize in 2000,

Lecture presented March 19, 2003.

 

James Heckman is the Henry Schultz Distinguished Service Professor of Economics at the University of Chicago.

Heckman's major contributions have been in the field of micro-econometrics, where he has developed theory and methods widely used in the statistical analysis of individual and household behavior. Heckman has developed methods to deal with the "selective samples" that characterize most micro data. Because samples of individuals (say, students attending college, married women in the labor force, those participating in job training programs) are not determined randomly and there are differences across individuals not observed by the researcher, it is difficult to obtain unbiased measures of statistical relationships. Heckman's methods address such concerns and permit one to better infer causality in the social sciences.

The Nobel Committee recognized Professor Heckman, jointly with Daniel McFadden, for their work in the field of microeconometrics, where each of the laureates has developed theory and methods that are widely used in the statistical analysis of individual and household behavior, within economics as well as other social sciences. Professor Heckman was cited for "his development of theory and methods for analyzing selective samples."

 

Quotes from James Heckman’s March 2003 lecture at Trinity University:

 

 

As a young child, I fervently embraced the faith of my parents and by age eight, I was a child minister giving sermons on Sunday evenings introduced by the motto taken from the New Testament ‘A little child shall lead them.’ It was expected that when I became an adult, I would be a minister…My deep religious belief led me to read and study the Bible. I committed vast passages to memory…By my early teenage years…I began having doubts...I began to notice inconsistencies in the Bible, and as I read more broadly in science and philosophy, I came to question the literal interpretations of creation and aspects of the fundamentalist Christianity with which I was raised...I found that I was unable to accept authority qua authority, a trait that has characterized me ever since…At the same time, I learned early to live off my own intellectual and emotional resources…Anchoring my own research in serious empirical analysis has protected me from the fads that plague the profession and has given me the autonomy and independence I have always craved…This is my way of following my father’s advice of being independent and developing an independent reputation, and my way of avoiding appeals to authority in any form – whether mathematical or divine – that motivated my early break with organized religion.

 

That [high school physics] class and my exposure to [Frank Oppenheimer] were truly life-transforming experiences. He was the first truly brilliant mind I had ever encountered. He introduced me to the life of the mind. Our class read everything he told us to read in science and other subjects. We rushed out to read the books and articles he casually mentioned while he conducted physics experiments with us. We learned to love the late quartets of Beethoven at his house, and we discussed the philosophy of science into the night…The profound simplicity of the physical world and the ability of mathematics to predict it overwhelmed me. If I had any religion at that time, it was Deism…The possibilities of science seemed limitless.

 

My choice of Colorado College was more eventful then I could have forecasted...In my junior year, I took a readings class in economic growth from Ray Werner...We read Ricardo, Smith and Arthur Lewis…The professor also gave me his copy of Samuelson’s Foundations of Economic Analysis (which I still own) to read as an extra bonus. Samuelson’s Foundations had a major impact on me. It demonstrated to me that economics could be as rigorous and empirically relevant as physics…At the same time, it showed that economics had empirical content through the theory of revealed preference. I saw a counterpart in social science to the hard science I had experienced in Oppenheimer’s classroom. Lewis’s Theory of Economic Growth appealed to my liberal arts training...This junior year reading class led me to decide on economics as a career…I could have my science and my social science too.

 

I have closely followed the social experiment movement ever since those days. I am impressed by the blind enthusiasm the term “experiment” evokes and by the serious limitations of social experiments. The more carefully one looks at the product of social experiments, the less enthusiastic one can be about them. Human beings are purposeful in a way seed corn and laboratory rats are not. Economic policy design requires that analysts know more than the dose-response relationships produced by experiments. Years later I wrote on social experiments. What impressed me then was how little had been learned from the first wave of social experiments and how powerful and evocative the term “experiment” is to both popular and professional minds.

 

In the mid ‘80s, in the course of my research with Richard Robb on the nonparametric identification of selection models and causal models, I was invited to an interdisciplinary conference on inference from self-selected samples. Robb and I presented a paper before an audience that consisted largely of statisticians…We discussed the fundamental identification problem that arises from self selection when evaluating the impact of “treatment” on outcomes…We presented the fundamental causal model that economists have been using since the work of Haavelmo in the 1940s, and we showed how alternative assumptions about agent program participation rules, outcome equations, distributions of unobservables and access to different types of data solved the problem of causal inference. We were stunned by the overwhelming negative reaction to our paper and especially to our main point about the conditional nature of causal knowledge. We made what we thought was the obvious point that in the absence of an idealized experiment, answers to causal questions required assumptions…We were not happy with this intrinsic ambiguity in causal models, but we felt it was necessary to be intellectually honest about it.

Although I have had many brilliant colleagues, and I have benefited greatly from them, it is to the students of Chicago that I owe my greatest debt. Top students at Chicago are brilliant and hard working. Early on in their careers, they get caught up in the intensity of the place. They are deeply curious and willing to learn. Interacting with them on their work has taught me a lot. For years I have run a kind of apprenticeship system where students do empirical work, applied econometrics and theory under my close supervision. Students participating in this system have been incredibly helpful sounding boards for my ideas over the years, and many have been coauthors on papers on which they have been full partners. I am proud that many first rate Chicago students now prominent in the profession coauthored their first publications with me.

They were and are a major stimulus to my own work.

 

The larger lesson I took from this research [on race] was that one had to use all of the available information to analyze causal questions. The available information does not necessarily come in the form of sampling distributions from government surveys or bounds on the ranges of random variables. Knowing the problem being studied and its context, which in this case meant reading the relevant history and newspapers, reading court and legislative records, using the relevant theory and looking at all of the available data were essential in reaching any causal conclusion. There is no algorithm to crank out convincing evidence, although econometrics textbooks are often written as if there is. This lesson forever impressed on me the limitations of standard econometrics, the even greater limitations of the universal context-free nostrums for finding causal relationships offered up by statisticians and the need to understand the relevant economic models and contextual information in establishing causal relationships.

 

Additional resources on James Heckman are available at the Nobel web site.

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