Social Experimentation and Economic Policy

Abstract

Social experimentation is a tool that enables economists and policy makers to test proposed economic policies in the real world. Instead of testing policies by analytical methods or by laboratory simulation, the policies are tested on people who would be affected were these policies implemented. The authors describe how such social experiments are set up and carried out, and consider the advantages and disadvantages of social experimentation relative to other means of evaluating economic and social policies. The main part of the book is a review and a critical evaluation of the principal social experiments in economics that have been carried out in the United States, where this method has been used most extensively. The authors examine in detail the first large-scale experiment in the United States (the New Jersey Income Maintenance Experiment) and subsequent experiments with the labour force, electricity rates, and cash housing allowances. A consideration of the social utility of social experimentation follows, and the book closes with a set of recommendations on the conditions under which social experimentation might best be used in evaluating economic and social policies.