The Credibility Revolution in Empirical Economics: How Better Research Design is taking the Con out of Econometrics

This essay reviews progress in empirical economics since Leamer's (1983) critique. Leamerhighlighted the benefits of sensitivity analysis, a procedure in which researchers show howtheir results change with changes in specification or functional form. Sensitivity analysis hashad a salutary but not… a revolutionary effect on econometric practice. As we see it, thecredibility revolution in empirical work can be traced to the rise of a design-based approachthat emphasizes the identification of causal effects. Design-based studies typically featureeither real or natural experiments and are distinguished by their prima facie credibility and bythe attention investigators devote to making the case for a causal interpretation of the findingstheir designs generate. Design-based studies are most often found in the microeconomicfields of Development, Education, Environment, Labor, Health, and Public Finance, but arestill rare in Industrial Organization and Macroeconomics. We explain why IO and Macrowould do well to embrace a design-based approach. Finally, we respond to the charge that thedesign-based revolution has overreached.