Book recommendation: Randomistas

Fun book about the benefits of randomized controlled trials to evaluate medical treatments, social programs, and business practice.  For example, in 2003, CVS ran a randomized trial, stopping price promotions in 400 randomly selected stores. 

Three months later, the evidence was in.  By axing the promotions, CVS sold fewer products at higher prices [yes, demand curves do slope downwards!].  Across the 400 stores that ran the experiment, profits were up.  Not surprisingly, CVS soon put the change in place across all its 9000 stores.  A simple randomized trial likely increased the organizations annual profit by $50 million.

On Gary Loveman, an economist who left Harvard to run Harrah's, and who comes to Vanderbilt to speak, said three are three cardinal sins at Harrah's:

...you don't harass women, you don't steal and you've got to get a control group.