Partly in response to the uncertainties inherent in econometric results based on nonexperimental
data, there has also been a significant move towards social experimentation,
and experimental economics in general. A social experiment aims at isolating the effects
of a policy change (or a treatment effect) by comparing the consequences of an exogenous
variation in the economic environment of a set of experimental subjects known as the
‘treatment’ group with those of a ‘control’ group that have not been subject to the
change. The basic idea goes back to the early work of R.A. Fisher (1928) on randomized
trials and have been applied extensively in agricultural and biomedical research. The
case for social experimentation in economics is discussed in Burtless (1995). Hausman
and Wise (1985) and Heckman and Smith (1995) consider a number of actual social
experiments carried out in the US and discuss their scope and limitations.