Wednesday, December 15, 2010

Randomized Social Experiments

In a really fascinating post, Alex Tabarrok discusses controversy about a random clinical trial set within a housing program. It's a very interesting example (and his quote from E. E. Peacock, Jr. was priceless). But it does bring up a serious question: in many areas of social policy there is no realistic way to blind experiments and, similarly, the idea of informed consent is hard to implement in practice.

Consider this point as well: the only way you will be able to get rational actors to consent to an experiment on housing is if all of the options in the intervention are equal or better than the status quo. That means you can never experiment to see if the current plans are working, insofar as informed consent is required. Nor can one really argue that coercion is not present given that people enter these programs out of desperation.

I think the real difference is that we have two different sources of utility: the user of the program and the agency (via the taxpayer) who is implementing the program. So it becomes a complex problem because the status quo might benefit the user (marginally) and harm the taxpayer/state/agency (greatly) but you will never get users to consent to testing how they will do with fewer benefits (or at least the incentives are wrong). Compare this with drug trials: only the patient’s ability to benefit is typically considered (although cost effectiveness may matter later in the approval process).

But the alternative is simply to not know what the right answer is and to risk getting stuck at a very suboptimal policy point. And that seems to be the wrong answer as well.

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