“Without understanding that life is a laboratory, and that we must all learn from our discoveries, we cannot hope to make headway in crucial areas.”
Paying students for marks gives them an incentive to study. Does it also crowd out intrinsic incentives for the same, crippling students by making them unable to study when they are not immediately paid for it? If a gay couple tries to buy a car, does the dealership discriminate against them because they are inherently hostile to gays, or because they believe they can increase their profits by doing so? Should charities allow people to opt out of receiving mailings, and if so, will that increase or decrease donations?
If you are a teachers’ union, activist, or charity, you likely have strong opinions on the answer. What you may not have is any actual knowledge. Gneezy and List, two great experimental economists, argue that fundamental questions such as the best ways to educate, fight discrimination, and run businesses lie at the heart of experimentation. Without it, we cannot understand the world we live in, forced to reason by post hoc ergo propter hoc: that because things occur at the same time, one must cause the other. With experimentation, we can establish true causality, understanding how what we do affects the world around us.
To understand education better – and with the help of a $10 million dollar donation from some hedge fund managers – they have established their own schools, one focusing on teaching will-power and delaying gratification, and the other a more standard academic curriculum of reading, writing, and arithmetic. To understand discrimination, they tried having gay couples purchase cars while signalling they planned to check other dealerships, and found that discrimination disappeared; to understand charitable giving, they experiment with several different approaches, finding that having a pretty girl ask for donations and offering a lottery prize for donating are equally effective in increasing donations, but that the lottery has long term effects while the pretty girl does not. Giving people the opportunity to opt out of mailings is most effective of all, however, increasing initial donations, leaving long-term donations unchanged, and saving money on mailings.
The Why Axis is another in a stream of books by economists popularizing their work. As with many such, it is reasonably well written, and stocked full of anecdotes, stories, and examples. It is more interesting than most, however, because experiments provide particularly interesting fodder for discussion. In addition, Gneezy and List argue passionately for a more experimental way of looking at the world. Whether we are considering a new job, a new product, or a new policy, trying it out on a small scale provides information essential to avoiding blunders. To my mind, they’re definitely correct we would be better off if we experimented with different ways of doing things a bit more; in that spirit, pick up a paper or two of theirs to see if you find them interesting, and if so, the book might well be worth it.