“Randomistas”: A new development economics

Abstract

The paper explores a curious phenomenon in the modern economic science — the intellectual confrontation between proponents of new development economics (“randomistas”) and its opponents. The general message of the new approach is that the technique of randomized controlled trials/experiments (RCT) must be considered the only truly scientific method, and only this technique should be used in studying the problems of developing countries. RCTs have been recognized as the “gold standard” in evaluating the effectiveness of anti-poverty programs; today this approach absolutely dominates in development economics. The paper discusses the main features of the RCT economics: an inclination to imitate biomedical research; atheoretical character; the idea of a hierarchy of methods; reorientation from large-scale macroeconomic and institutional reforms to targeted social and humanitarian interventions. The problems of internal and external validity of RCT are highlighted. A general conclusion is that conceptually counter-arguments of critics look more convincing: the idea of a hierarchy of methods is unscientific; no methodological “gold standard” exists in economic analysis; estimates obtained on the basis of RCT cannot be considered unbiased; RCTs are almost powerless in the face of the problem of external validity; policy recommendations derived from RCTs are of very limited practical value. However, the logic of critics has been trumped by the rhetoric of randomistas: most likely, randomized experiments will escalate, and their intellectual and political influence will grow.