Three U.S.-based researchers were awarded the Nobel Prize in economics for using natural experiments to study the effects of economic policy and other societal questions.

Why it matters: The Nobel committee said David Card, Joshua Angrist and Guido Imbens have "completely reshaped empirical work in the economic sciences," per AP.

Driving the news: Card, a professor at the University of California, Berkeley, received half the award. The other half was shared by Angrist, an MIT professor, and Imbens, a Stanford professor.

• The prize in part honored Card's research on the labor market with Alan Krueger, a chairman of the Council of Economic Advisers under former President Obama who died in 2019.

The big picture: Natural experiments use real-life situations to study the economic impacts of policy decisions.

• In one influential paper, Card and Krueger studied fast food restaurants along the border of New Jersey and Pennsylvania and found that a recent minimum wage hike in one state didn't affect employment.
• Card also studied the economics of immigration and challenged the belief that migrants depress the wages of blue-collar workers.
• Angrist and Imbens were honored for their work demonstrating "how precise conclusions about cause and effect can be drawn from natural experiments."

What they're saying: “Card’s studies of core questions for society and Angrist and Imbens’ methodological contributions have shown that natural experiments are a rich source of knowledge. Their research has substantially improved our ability to answer key causal questions, which has been of great benefit to society,” says Peter Fredriksson, chair of the Economic Sciences Prize Committee.