What Alan Krueger Taught Us
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Princeton economics professor and former Obama adviser Alan Krueger died this past weekend at the age of 58. The cause of death was suicide. Krueger made enormous contributions to the field of economics and, more broadly, to policies that affect the lives of all Americans.
"Alan embodied what I think is best in economists," said former U.S. Treasury Secretary Larry Summers, who was a mentor to Krueger while Krueger was getting his PhD at Harvard in the mid-1980s. "He did it to make the world a better place."
In the early 1990s, Krueger rocketed to stardom with his paper, "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," which helped overturn decades of thinking about the minimum wage. Economic theory had long held that the minimum wage destroys jobs. If employers were forced to pay workers more, economists believed, then they would always hire less.
Krueger, together with his colleague David Card, wanted to see what the evidence said, and they did so by analyzing the effects of a minimum wage increase in New Jersey. They approached their research as if it were a randomized trial. There was the treatment group, restaurants in New Jersey affected by the increase in the minimum wage, and the control group, restaurants in nearby Pennsylvania that were not. Using this innovative approach, which viewed the policy change as a "natural experiment," they showed that a moderate increase in the minimum wage did not result in fewer jobs.
This paper was one of many of Krueger's that served as early salvos in what economists call "the credibility revolution," which deemphasized traditional economic theory and methods and instead used innovative approaches like natural experiments to understand the real world. "And Alan was one of the very first to do that and show how important and powerful a tool it could be," said his colleague Jason Furman, a professor at Harvard who served with Krueger in the Obama administration.
Krueger's research tackled central policy issues of our time, like growing inequality and the effects of technological change on employment. "I don't think there was a big question or issue in labor markets that he didn't make an important contribution to," said Furman. Krueger also tackled many other subjects, including education, the environment, and the economic determinants (or lack thereof) of terrorism.
Krueger left academia for the Clinton administration in 1994, where he served as the chief economist of the Department of Labor. He also served as the Assistant Secretary for Economic Policy at the U.S. Treasury (2009 to 2010) and the Chairman of the White House Council of Economic Advisers (2011 to 2013) in the Obama administration.
"When I asked Alan Krueger to serve as my chief economist in the White House, he'd already had a stellar career inside and outside of government," said President Obama in a statement on Monday. "He spent the first two years of my administration helping to engineer our response to the worst financial crisis in 80 years, and to successfully prevent the chaos from spiraling into a second Great Depression."
Krueger's dedication to empirical economics continued after he left his job as Obama's CEA chair in 2013. Jason Furman, who took over as CEA chair after Krueger went back to Princeton, said that when most CEA chairs leave, they stop doing rigorous research and instead go the cushy route of pontificating on whatever they want. Not Alan Krueger. "If you look at Alan for the last five years, he was going just as strong, if not stronger, in that type of empirical research as at any part of his career," Furman said.
Krueger's passing will be especially felt in Princeton, where he spent three decades as a professor. Cecilia Rouse, dean of the university's Woodrow Wilson School, where Krueger long taught, emphasized he was a creative and enthusiastic teacher who "loved getting students excited about economics."
Krueger also loved music, and he combined his two loves in a forthcoming book called Rockonomics. Furman recalled Krueger's excitement when he learned that Bob Dylan was Furman's neighbor growing up. "When Alan found that out he couldn't stop talking to me about it," Furman recalled.
One of Krueger's last speeches as CEA chair was at the Rock and Roll Hall of Fame. "I'm told that President Obama distributed Alan's speech, on rock economics as a metaphor for understanding what was happening in the broader economy, to the whole cabinet," said Summers.
Betsey Stevenson, an economist at the University of Michigan and another former Obama adviser, shared memories of Krueger being an "incredibly generous mentor" to her early in her career and also before she took the job of chief economist at the Department of Labor, a job that Krueger once held. "He really made time to mentor a lot of people," Stevenson said.
Stevenson commended Krueger's commitment to rigorous research of policy issues. But, she stressed, this commitment was about more than simply being a good academic or social scientist. "Really what he was committed to was improving people's lives."
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