History and Case Studies as Evidence

How economic history and detailed case studies complement statistical methods, and what they can reveal that experiments cannot.

Randomised trials and natural experiments are powerful, but many of the biggest questions in economics cannot be tested that way. Why did the Industrial Revolution begin in Britain? What causes financial crises? Why are some countries rich? For these, economists turn to history and detailed case studies.

What history offers

History provides a very large set of events that no researcher could ever create: wars, famines, currency collapses, booms, reforms and revolutions. Economic history uses records from the past to study how economies behaved under very different conditions.

History also reveals long-run effects that short studies miss. Researchers have shown, for example, that some institutions set up centuries ago still shape income today. Work by Daron Acemoglu, Simon Johnson and James Robinson on how colonial institutions affected long-run development was recognised with the Nobel prize in 2024.

Narrative evidence

A famous example of history as evidence is A Monetary History of the United States, 1867 to 1960, published in 1963 by Milton Friedman and Anna Schwartz. They traced changes in the money supply through a century of U.S. history and argued that the Federal Reserve’s failure to prevent a collapse in the money supply turned the downturn after 1929 into the Great Depression. Their careful reading of the historical record reshaped views on monetary policy.

Later, economists Christina and David Romer used a narrative approach, reading records of central bank meetings and government decisions, to identify policy changes made for reasons unrelated to current economic conditions, then measured their effects.

Learning from a crisis

No one can run an experiment in which a country's banking system collapses. But historians and economists can compare dozens of past banking crises across countries and centuries. Carmen Reinhart and Kenneth Rogoff's book This Time Is Different gathered data on crises over eight centuries and found that recoveries after financial crises tend to be slow and painful. History supplied evidence no experiment could.

Limits

History does not repeat exactly, so lessons must be drawn carefully. Records can be incomplete or biased toward the powerful. And with only a few major events, it is easy to find patterns that are coincidences. Good historical work combines careful sources with clear reasoning about what else might explain the pattern.

Thinking history is just stories, not evidence

Economic history uses systematic data and careful methods, not just anecdotes. Many of today's most important ideas about growth, money and crises came from studying the past.

Key takeaways

History supplies events and long-run effects that experiments cannot create.
Research on colonial institutions and development was recognised with the 2024 Nobel prize.
Friedman and Schwartz used historical evidence to argue that monetary collapse deepened the Great Depression.
Historical evidence must be interpreted carefully because events never repeat exactly.