Dimensions of Parallelism: Some Policy Applications of Experimental Methods

Abstract

[Introduction] The term "parallelism" refers to a vague notion about how observations of simple laboratory phenomena can help one understand and predict the behavior of a complicated and changing world. Of what use are experimental results to someone who is interested in something vastly larger and more complicated, perhaps fundamentally different than anything that can be studied in a laboratory setting? Questions such as this and the related notion of parallelism have probably existed from the earliest development of scientific experimental methodology, and although I found the term in a paper by Vernon Smith (1980) the notion itself pervades all branches of science and engineering.

The purpose of this chapter is to isolate some examples of how the issue of parallelism has been approached in economics. The chapter outlines several strategies that have been employed in attempts to use experimental research in actual policy decision making. The topic to be explored is how issues have been posed in these policy-related studies so that experimental methods could be applied. The discussion is limited to 10 instances in which I have been involved personally at some level.

Many different opinions exist about experimental methodology and the relationship between laboratory work, field studies, and policy decisions. The opinions are strongly held and are just as likely to be held by those with no experience at all in applying the methods as by those with much experience. For example, the textbook by Samuelson and Nordhaus (1983, p. 8) boldly claims that experiments in economics are impossible. Presumably these authors believe that some sort of field study is the only way to approach an application of experimental methods. Referee reports frequently reflect methodological philosophies and related concepts of parallelism. Every experimentalist who has submitted a paper to a professional journal has read a referee report aggressively claiming that the experiments had nothing to do with the "real world" or that the experiments were not " relevant" for some reason or another. My impression is that such critics have very narrow views about the connections between laboratory and naturally occurring situations, and they approach experimental methods with unrealistic expectations about what can be learned from applications.

This impression brings me to my point: Economists should keep an open mind about experimental methodology and should judge work by the statements of results rather than by methodological principles. Methodological principles should evolve from our experiences with what works and what does not work. That point is reflected in the title and organization of this chapter. The topic is policy research as opposed to basic research. The issues are: What was attempted, what seemed to work and why, what was a flop and why?

The examples are organized according to what seems to have been the principal strategy for using the experiments. Each strategy can be viewed as a " dimension" or form of parallelism between policy problems and laboratory experiments. Five different strategies are identifiable. Each section treats a different strategy. The discussion includes a general description of the strategy, the context of the policy problem, and the role of the experiments in the final policy decision if any decision resulted.

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