Stanford Professor Dave Donaldson honored with prestigious economics award

Dave Donaldson, associate professor of economics, has received the prestigious John Bates Clark Medal from the American Economics Association (AEA).

Dave Donaldson (Image credit: Steve Castillo)

The annual award is given to the “American economist under the age of 40 who is judged to have made the most significant contribution to economic thought and knowledge,” according to the organization. The AEA specifically praised Donaldson’s research in the fields of international trade and development economics

“He has not only established himself as a leader in the field,” said the AEA statement, “but he has also formed and become the principal practitioner of a distinctive style of research, based on important conceptual questions, careful data work and credible identification combined with state-of-the-art structural methods.”

The Stanford News Service spoke with Donaldson, who is also a senior fellow at the Stanford Institute for Economic Policy Research, about the award and his research.

What does it mean to receive this honor?

I work in a field where we are all, collectively, working to improve our evidence-based understanding of policy issues, and I am lucky to be a part of that community. I’ve worked with incredible co-authors and students on every paper I’ve ever written, though no collaboration has been more persistent and important to me than the one I have been fortunate to share with Arnaud Costinot at MIT. The whole thing feels like a big team effort and I am just proud to be a part of that.

What has been the reaction from your colleagues and students?

You couldn’t ask for a warmer reaction – and not just from people in the Economics Department, but from the Graduate School of Business, the Freeman Spogli Institute, the School of Medicine, Political Science and others. I’m very fortunate. We all interact on a daily basis through teaching, research seminars, and corridor and lunchtime chats. People know the papers I’m working on and I know what they’re working on. We share the highs as well as the lows!

In addition to your research findings, the AEA also celebrated your research methods. What makes your research style distinctive?

Everything I’ve done is just an amalgamation of tools I’ve learned from my co-authors, colleagues, fellow researchers and students. For me – and I believe this is the key goal of the field of economics nowadays – I want to use theory and a lot of data and good evidence to inform how smart policy should be carried out. If you’re extremely lucky, you find policy changes that don’t involve tradeoffs. But most of the time, you need good evidence to help inform decision-makers about the tradeoffs that policymaking involves. Without such evidence, we are just flying blind, so using data to fill in the gaps in our understanding is what motivates me. And even when it is obvious that a policy change would be a good idea, because of policy inertia, we still need data to know how important that change could be – how much is being left on the table if we don’t enact the change – and so, again, good data-based science is indispensable.

Your papers have studied railroads in India in the 19^th century and U.S. agriculture in the 20^th century. Why are these fertile areas of study? How are they relevant to us today?

I’ve always been interested in trade. Historically, within the study of economics, “trade” has largely meant international trade. But obviously, the bulk of the trading we do every day is with other people within the same country, not just with other countries. What would the Bay Area be without the ability to export to other parts of the U.S. and beyond all the things that its economy specializes in? We wouldn’t have all this growth and these tech companies. That process always struck me as an under-studied cornerstone of growth and development. It has also always seemed strange to me that international trade can be so politically controversial, but intra-national trade between, say, California and Colorado is not. Why not?

Imagine living in India in 1870 and suddenly this “iron horse” arrives. Goods begin arriving from all parts of India, and you can now sell to those other parts, too – the price of what you buy has gone down and the price of what you make and sell has gone up. There have been these massive investments in infrastructure and transportation over the last 100 years or so, with the main goal being to enable freer intra-national trade. I wanted to understand what impact that had. These kinds of opportunities to study big transportation infrastructure projects are rare, so we have to grab them when we can find them.

Those changes, even 100 or 130 years ago, are stark and illuminating. We’re lucky to live in an age where it is relatively easy to digitize maps and archival records and to then use mapping and statistical software in powerful ways.

You’re the sixth scholar in 10 years with Stanford ties to have received this award. What does this say about the caliber of scholars you’re surrounded with at Stanford?

We have a world-class group of researchers, and I’m incredibly lucky to be part of that. The Stanford economics community, including the Graduate School of Business and beyond, always struck me as amazingly good at integrating faculty and students across the sub-disciplines of economics. That cross-pollination is a distinctive and important hallmark of the Stanford culture, and I know my work wouldn’t be the same without it.