Giving Compass' Take:

• Lisbeth B. Schorr, at Stanford Social Innovation Review, reviews Michael Luca and Max H. Bazerman's book, The Power of Experiments, taking issue with its stance on solving social problems.

• Schorr contends that the book neglects the importance of other evidence-based solutions. Why is it important to have a broad perspective on soliving social problems? How can you implement experiments and other data for smart solutions in your organization? 

• Watch this video for a different view on the importance of social experiments.

In The Power of Experiments, Luca and Bazerman explain how economists have teamed with psychologists to develop the experimental tools of behavioral economics, with the objective of replacing intuition and guesswork with evidence-based decision-making. They highlight the success stories from experimentation in the government and the tech sectors, and they predict that the experimental approach will soon become common in both for-profit and nonprofit organizations. Experiments, they write, give organizations “a new tool to test ideas and to understand the impact of the products and services they are providing.”

Despite the engaging stories, I found this book unsettling because Luca and Bazerman are never explicit about the book’s big secret: that the problems addressed by the experimental methods they advance are, with only rare exceptions, small-scale. No doubt, experiments with audience behaviors can save advertising dollars, encourage default choices, and show which font sizes and background colors lead to more clicks. But these experiments provide only very limited guidance for solving major social problems.

What is most crucial to understanding the limits of behavioral economics is that its tools are a good fit with one clearly definable subset of problems and solutions, but not others.  The experiments that are the province of behavioral economists and that are lauded in this book are useful primarily to those who would address predominantly simple problems with predominantly simple solutions.

The overarching issue—which Luca and Bazerman neglect—is that “evidence-based” does not have to mean “experimental-based.” The Power of Experiments reflects the failure to distinguish between the kinds of evidence needed to certify effective drugs and the more complex and broader array of evidence needed to guide social policy.

Read the full book review about solving social problems by Lisbeth B. Schorr at Stanford Social Innovation Review.