Piketty and Heckman: Why economics needs data

[JAMES HECKMAN] Data essentially allow us to discriminate

among alternative explanations.

[THOMAS PIKETTY] I think theory can be useful but I think sometimes economists spend too much time

doing very sophisticated theory without knowing what are the facts that they are trying to

explain and understand.

[JAMES HECKMAN] When Adam Smith was writing The Wealth of Nations many deep ideas that he had came but he didn't

have a body of data.

[THOMAS PIKETTY] When I started as a graduate student I realized that there was actually very

little data collection.

[JAMES HECKMAN] We might observe some fact. Then we want to know well, is this fact an anomaly?

[THOMAS PIKETTY] So we have to measure these

things to make proper comparisons to see, you know, when these claims are justified.

[JAMES HECKMAN] And then the second

question would be, even if it's a repeated finding, what are the mechanisms that give

rise to that repeated finding?

[THOMAS PIKETTY] Better data is not going to make the world a peaceful place but at least it can allow us to

have a more informed discussion.

[JAMES HECKMAN] As you try to collect data and you try to use every source of information available to you.

[THOMAS PIKETTY] Go back to the historical data. Collect in a much

more systematic manner than what was done before.

[JAMES HECKMAN] So I've looked at data from what are called cross-sections; looking at different individuals,

following the same people over time.

[THOMAS PIKETTY] Taxation is always more than taxation. It's also a way to produce information, you know, to society.

[JAMES HECKMAN] So you look at multiple sources of data,

all of it non experimental.

[THOMAS PIKETTY] It's a way to produce legal categories, statistical categories, which can then be used

by economists and other social scientists.

[JAMES HECKMAN] And also using economic theory to help organize your thinking.

[THOMAS PIKETTY] The history of income

and wealth is not just a pure economic history; it is a political history, or social history.

[JAMES HECKMAN] Parts of the story may not yet be

fully understood and that's the challenge.

[THOMAS PIKETTY] Instead of just proving sophisticated mathematical theorems in order to impress

others we should just, you know, try to collect data, establish facts, and try to learn something.