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I am particularly interested in hearing thoughts on what are logical next steps in the research agenda of people who are interested in "The experimental approach to development economics" or in the evaluation of policy.

Many people reject the notion that a randomized controlled trial (RCT) can estimate relevant policy parameters. They generally argue for a more "structural" approach. Is there a good middle-ground and will structuralism begin to take hold?

d_a_c321
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  • This question is not about "experimental economics"; that term is used to talk about lab experiments which are usually designed to test decision/game theoretic predictions, but occasionally also to answer other questions. I'm suggesting a change in the title of the question to reflect this. –  Oct 16 '11 at 17:12
  • Good point! I agree. – d_a_c321 Oct 16 '11 at 23:18

2 Answers2

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I think Economics is still very ambivalent about what to do with field experiments.
I would start with the very recent:

Card, Della Vigna, Malmendier The role of theory in Field Experiments (of which you can find an amazing review here)

Besides being a nice review of the literature it points out the gulf between theory and experiments.
In particular the authors are unsatisfied with so many field experiments being just "descriptive". A few papers try to calibrate a theoretical model with the experiment but very very few test whether the theory is correct or not.

The second observation (the review underlines it) is the weird gap between lab experiments and field experiments.Why experiments in the lab give you one result but on the field gives you the exact opposite?

I think these two discontinuities would be amazing topics for investigation

CarrKnight
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Chris Blattman, Assistant Professor of Political Science & Economics at Yale, is conducting exactly such a randomised controlled field experiment in Ethiopia on the impact of low-skilled assembly-line-style investment on poverty and development:

An Ethiopian venture capital firm, Access Capital SC, plans to open several medium-size firms in 2010 in different sectors and regions of the country, creating hundreds of low-skill jobs. With thousands of applicants to these positions, Access Capital has agreed to select its new hires randomly from the pool of qualified applicants, allowing the first control trial of formal sector wage labor.

They are also including control cases (i.e. equivalent areas where no such investmnet took place) in order to compare differences.

  • What are the effects of formal and informal sector incomes on consumption, risk, stress, health, and politics?
  • How do these effects spill over into the household—to labor supply, agricultural productivity, and child health and education?
  • What is the short and long term impact on child labor in the household?
  • What is the effect of industrial work on political organization and consciousness?

The difficulty and cost of such experiments implies that these will always be thin on the ground in comparison to traditional approaches. However, a few well-researched and pursuasive results from randomised controlled field trials should still provide a useful steer to the theory.

Turukawa
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