The Experimental Turn in Economics: A History of Experimental Economics

The author is Andrej Svorenčík and he has produced the definitive account of the history of experimental economics.  The SSRN paper is here, but it is more accurate to think of this as a monograph at 248 pp. of text.  I hope a major publisher is interested, but do note it starts off a bit slow.  Once it gets going it never lets up and I learned a great deal from it.  Here is just one excerpt:

When Austin C. Hoggatt died on April 29, 2009, at the age of seventy-nine the experimental economics community lost a low profile yet very influential figure.  Hoggatt was the first to build a computerized laboratory for controlled experimentation in economics or, more broadly, in the social, behavioral, and decision science — the Management Science Laboratory at the Center for Research in Management Science at UC Berkeley in 1964.

If you think you might be interested you will be.  The paper/monograph is strong on recognizing the need for an integrated approach to experiments, involving software, support staff, programmers, and researchers, and tracing how all this came together, or in some cases did not.  You really get the inside story from Svorenčík.

Comments

Outstanding. I'm amazed that in economics there's very little experimental economics. The Austrians of course reject all empirical data, but the Keynesians are not much better: they point to just college laboratory experiments that prove money illusion on a small scale involving token amounts of money. The monetarists ignore the data that shows the Fed follows the market, or, such as in the early 1980s Volcker Fed, the counter-intuitive instances where the Fed *lowered* interest rates and inflation *fell*. Seems everybody is wedded to their textbook 2D charts.

Huh, that does not seem to be an accurate description of "monetarists". They wouldn't describe low interest rates and low inflation as counter-intuitive.

Yeah. Sumner always says low rates aren't easy money

Sumner is chasing a chimera, so I don't know what he thinks (and I read his blog). But mostly, traditionally, "monetarists emphasize a steady growth rate of money and use monetary policy to control inflation by increasing interest rates and slowing the rise in the money supply" (Wikipedia). When the data does not support this view, monetarists will resort to the "expectations fairy" to wish-away why their experiment did not fit the data, namely, the people did not expect the Fed to be credible or other such hand waving.

The Management Science Laboratory was funded by the National Science Foundation. Academic research, even at public colleges and universities, is increasingly funded by private sources; indeed, several public universities are funded almost entirely by private sources. Does it matter? Defenders say that private funding avoids public meddling (by politicians). Detractors say that private funding merely substitutes private meddlers for public meddlers. Would the National Science Foundation fund Dr. Hoggatt's laboratory today? Would the laboratory exist absent funding by the National Science Foundation. Would the laboratory have the same reputation today for independent research if it had been funded by private sources?

You are asking the chairman and general director of a center which proudly proclaims that it 'does not receive financial support from George Mason University or any federal, state, or local government' - even while being 'at' a publicly funded university, and generally presenting itself as being an actual part of an actual academic institution.

The importance of being seen as publicly funded is of major importance to those responsible for the public presentation of the Mercatus Center. If it was widely known that the Mercatus Center actually has literally no real connection to a publicly funded university, and its funding/governance structure apparently so constructed to avoid all of the scrutiny to which taxpayer funded institutions and employees are subject to, one can be confident that chairman and general director would rather not having any discussion at all, anywhere that the discussion can be removed.

http://mercatus.org/content/about

I'm sorry that GMU fired you, but it's probably time to let it go.

As a physicist and scientist and computer engineer by career with two decades in testing, I find it disturbing that economists think most experiments are done in labs.

In physics, all the important work is done by studying history, with almost all the expense in building data collection systems and actually collecting the data on historical events that happen every day back for 14 billion years.

In studying science, physics is often the go to for teaching statistical analysis of data collected by quick simplistic experiments. Timing a pendulum swing or a ball rolling down a ramp produces noisy data quickly, demonstrating the problems in getting measurements, the dispersion of data points, and with luck the failure to confirm what is true by failure to pay attention to detail.

After that, experimentation involves years of drudgery pouring over data. The key skill in an experimenter is getting results early so you can be in a position of power to write and get grants to hire slave labor (RAs) to do the drudgery and thereby get some insight to have their name on a result so they can have their own slaves to help with the drudgery.

Economists these days sure think that labor is a liability and thus endeavor to never labor.

If it hadn't been for the people around FDR and the Democrats looking for answers circa 1930, economics would still be primarily political and moral philosophy. The Federal government hired thousands of people to do the data collection on the economy factors of production - these people became economists.

All the definitions of terms that make up economic discussion and debate and papers were created in the 30s to 50s by government economists, the data collectors.

Employed, unemployed, worker in labor force, not in labor force, income, are all based on definitions created by government data collection employees so they could collect data to answer questions for FDR's experiments:

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach. We need enthusiasm, imagination and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer. We need the courage of the young. Yours is not the task of making your way in the world, but the task of remaking the world which you will find before you. May every one of us be granted the courage, the faith and the vision to give the best that is in us to that remaking!
Oglethorpe University Commencement Address (22 May 1932)

Make no mistake, the experiments by politicians did not end when FDR died.

Brownback in Kansas is running a grand experiment to prove, or disprove, the idea that rewarding the rich and punishing the poor with create more rich people and eliminate poor people.

Reagan set off a whole line of experiments to prove

cutting taxes generates more tax revenue

opposing balanced budget laws while calling for a constitution amendment mandating a balanced budget is the way to be a fiscal conservative

Running up more and more government debt will make government smaller

Tax shelters for retirement will eliminate the need for welfare for old people because the working poor will save millions for retirement in order to save $5 a year in taxes in order to pay $5000 a year in taxes in retirement

The reasons so many people are in debt is the restrictive bank regulations on interest rates so deregulating the banks will result in zero consumer debt with high rates of interest in checking accounts and personal loans with 3% interest rates because so few individuals borrow.

I think that going through Milton Friedman's columns from the late 60s and early 70s would provide so many experiments to run that merely require figuring out how to collect data from the past 50 years of history.

Did starve the beast make government smaller?
Did tax cuts result in faster growth?
Did eliminating tax loopholes result in better fossil fuel policy and less drill baby drill waste as Friedman saw occurred from the 50s and 60s?
Did floating exchange rates make the US industry more competitive in the global market?
Did floating exchange rates lead to balanced trade globally?
Did getting rid of Regulation Q result in higher rewards to savers and lower interest costs to those who were forced to use illegal loan sharks?

These questions are answered by looking at history because the hypothesis have been tested in US law that are nothing more than more of FDR's experiments.

This, my friends, is what a pyromaniac in a field of straw men looks like.

Well, actually you more likely share poor me stories.

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