HW #3 ECON 108

A.
 In "What Social Science Does-and Doesn't Know" had some very interesting points about how economics is a very different form of science than math or biological. One of these differences is that sciences like math a chemistry have set rules and laws that are written in stone and do not change. 2+2 will always equal 4. With economics, similar problems can't always be solved with the same action. There are too many variables as well as outside/uncontrollable factors to know 100% if a particular plan is going to work and help the economy out without future consequences. Something that economists try to do is controlled experimentation. Though the experiments are better put into the economy.I personally had this idea in my head before that economics is much more complicated than some think it is. This was shown in the  experiment of are people who are arrested for domestic violence more likely to commit crimes again compared to people who are not. It was found that the people who were arrested were less likely to commit future crimes than people who were just fined or let go for their illegal actions. When this was idea was implemented in other cities around the country, half of the cities had a lower crime rate because of the mandatory arrest. The other three had a increase in crime rate. This supports that though something may work in one environment does not mean that it will work in every environment. The reason why companies run tests is to find the best way of marketing their products. Every company runs thousands of experiments to find this. 




B. 
It says in the reading that programs that try to change incentives work much better than ones that try to change people. Why is it that people will change for incentives rather than change from learning what they are doing wrong and how to fix it?


Since it sometimes takes an extended period of time to see if a program helps the economy or hurts it, on what basis do economists base their ideas on since many times they do not know if what they implement into the economy will help or hurt us?


C. 
The main idea of this article is that social sciences are way too complex to use experiments to try and figure out a solution to a problem. There are way too many factors that go into decisions for the implementer to know everything that will be affected by their new program and how it will be affected. The only way to know if a program will be good for the economy is to let it run its course and see the results that occur because of it. The three main points that can be taken from this article that the author says are that 'few programs can be shown to work in properly randomized and replicated trials'. This is due to many variables that can not be recreated in a replicated experiment. The second rule is that "within this universe of programs that are far more likely to fail than succeed, programs that try to change people are even more likely to fail than those that try to change incentives."This could be because people respond to incentives. There is more to change for when you get an incentive rather than changing because someone else wants you to act that way. The third rule is that "there is no magic. The rare programs that do work usually lead to improvements that are quite modest, compared with the size of the problems they are meant to address or the dreams of advocates." This is pretty self explanatory.