Theory Remains Essential in Big-Data Age

Contrary to the interpretation that his work means 'just look at the data,' theory remains crucial in three domains: hypothesis formulation (you cannot organize data without a theory—e.g. testing Loury's cross-class interaction theory versus tight-knit-community theories), extrapolation to new policies/environments (which requires a theory to translate past findings), and general-equilibrium analysis (since the partial-equilibrium treatment-control paradigm cannot handle price changes and re-sorting because the control group gets contaminated).