5.5 Context and Omniscience

Here the challenges are not primarily technical in the sense of requiring new theorems or estimators. Rather, progress comes from detailed institutional knowledge and the careful investigation and quantification of the forces at work in a particular setting. Of course, such endeavors are not really new. They have always been at the heart of good empirical research - Joshua Angrist and Alan Krueger (2001).

• Context and domain expertise are extremely important
  
• Need to understand where data came from

Fill in as much of the DGP during design phase of research:

• Read books and articles
• Talk to experts
  
• Make sure you get the details right

Need for context reveals limitations of observational research:

• Can only really answer questions where context is well understood
• For less understood problems, results should be considered exploratory

Final tips:

• Try to address hugely important parts of DGP
  
• Acknowledge assumptions
  
• Try to spot gaps in knowledge in DGP, make realistic guesses about what’s in the gap
• Don’t aim for perfection