New measures for richer theories: some thoughts and an example

For a long time, the majority of economists doing empirical work relied on choice data, while data based on answers to hypothetical questions, stated preferences or measures of subjective beliefs were met with some skepticism. Although this has changed recently, much work needs to be done. In this paper, we emphasize the identifying content of new economic measures. In the first part of the paper, we discuss where the literature on measures in economics stands at the moment. We first consider how the design and use of new measures can help identify causal links and structural parameters under weaker assumptions than those required by approaches based exclusively on choice data. We then discuss how the availability of new measures can allow the study of richer models of human behavior that incorporate a wide set of factors. In the second part of the paper, we illustrate these issues with an application to the study of risk sharing and of deviations from perfect risk sharing.