Wednesday, July 16, 2008

Randomized experiments to evaluate policy

Anyone who reads this blog appreciates the importance of metrics to evaluate firm performance, e.g., profit, stock price, sales, and market share, to name a few. Government policy evaluators are trying to catch up:
..economists...have begun to champion the latest thing in development economics: “randomised evaluations” in which different policies—to boost school attendance, say—are tested by randomly assigning them to different groups. In one celebrated example, researchers looked at what happened in 20 antenatal clinics in western Kenya when some gave away insecticide-treated bednets, an anti-malaria therapy, and others sold them for different prices. Their conclusion was that free distribution is far more effective in getting people to use bednets than charging even a nominal sum would be.

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