This approach, once correctly installed, changes how many types of business decisions are made. Some issues are not practically testable. For example, a specific program may non-replicable; the decision may have to be made faster than a test could be conducted, and so on. But if a program is practically testable and an experiment is cost-justified (i.e., if the expected value of the incremental information is worth the cost of the test), experimentation dominates all other methods of evaluation and prediction.
This Baconian revolution is coming to economics and social science.
In fact, it's already happening. Weirdo experimental economists are starting to win the Nobel Prize. The recent Economist magazine round-up of the 10 most promising young economists in the world is rife with it. Established economists working in the current paradigm, as always, either dismiss it, or imagine that it is a niche sub-field that won't affect them. Time will tell, but I think they're entirely wrong.
Much of the work that we now think of as economics, political science and other social sciences will likely be displaced by some hybrid of biology, experimental economics, psychology and other fields that can evaluate hypotheses for the quantified prediction of human behavior through structured falsification tests (or, sometimes, true "natural experiments" in which non-intentional random assignment has occurred). As I've gone into in a recent post on possible interpretations of a specific clinical trial in Ghana, the big constraint on the practical utility of this science will likely be the problem of generalization from experimental results to forward predictions. Even in its current embryonic form, experimental economics already suffers from excessive rhetorical generalization from what some specific group of college sophomores did with $30 to fairly grand statements about human nature. But, as with business experimentation, where applicable, this new approach will dominate what we now think of as classical economics.
This will likely, at least for a long time, not address a lot of territory now covered in economics, including, for example, many of the issues related to the stimulus debates. These kinds of topics will of course remain interesting, and work will still be done on them in an academic setting; it will simply be even more obviously non-science, and be done down the hall in the history, philosophy and literature departments. Where it belongs.
Nullius in Verba.
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