Triple-blinded trials in political economy

In medicine, randomized controlled trials are the most highly regarded type of primary study, as they separately track treatment and control groups to determine whether an observed effect is actually caused by the intervention.

Bias, the constant bane of statisticians, can be minimized further by completing a blinded trial. In a single-blinded trial, the patient population is not informed which group they are in, to prevent knowledge of therapy from impacting results. Placebos are powerful, so blinding has helped identify dozens of therapies that are no better than sugar pills!

However, knowledge can contaminate studies in another way–through the physicians administering the therapies. Bias can be further reduced by double blinding, in which the physicians are also kept in the dark about which therapy was administered, so that their knowledge does not contaminate their reporting of results. In a double-blind trial, only the study administrators know which therapy is applied to each patient, and sometimes an independent lab is tasked with analysis to further limit bias.

Overall, these blinding mechanisms are meant to make us more certain that the results of a study are reflective of an intervention’s actual efficacy. However, medicine is not the only field where the efficacy of many interventions is impactful, highly debated, and worthy of study. Why, then, do we not have blinded studies in political economy?

We all know that randomized controlled trials are pretty much impossible in political economy. North/South Korea and West/East Germany were amazing accidental trials, but we can still hope that politicians and economists make policies that can at least be tracked to determine their ‘change from baseline’ even if we have no control group. Because of how easy it is to harm socioeconomic systems and sweep the ruinous results under the rug, I personally consider it unethical to intervene in a complex system without careful prior consideration, and straight up evil to do so without plans to track the impact of that intervention. So, how can politicians take an ‘evidence-based approach’ to their interventions?

I think that, in recent years, politicians–especially in the US and especially liberals and COVID-reactionaries–have come up with an amazing new experimental method: the triple blinded study. Examples include the ACA, the ARRA, and the recent $3 trillion stimulus package. In a triple blinded study, politicians carefully draft bills so that they are (1) too long for anyone, especially the politicians themselves, to read; (2) filled with a mish-mash of dozens of strategies implemented simultaneously or that are delegated vaguely to administrative agencies; and (3) have no pre-specified metrics by which the policy will be judged, thus blinding everyone to any useful study of signal and response.

I am reminded of one of the most painful West Wing episodes ever made, in which “President Bartlett” is addressing an economic crisis, and is fielding dozens of suggestions from experts–without being able to choose among the candidate interventions. Donna, assistant to his Deputy Chief of Staff, tells a parable about how her grandmother would use ‘a little bit of this, a little bit of that’ to cure minor illnesses. Inspired, Bartlett adopts a policy of ALL suggested economic interventions, thus ensuring that we try everything–and learn nothing. I shudder to think that this strategy was ever broached publicly…and copied from fiction into reality.

In this way, politicians have cleverly enabled us to reduce the bias caused by any knowledge of the intervention or its impact. The patients (citizens), physicians (politicians), and study administrators (economists?) are all kept carefully in the dark so that none of them can know how a policy impacted the economy. Thus, anyone debating any of these topics is given the full freedom to invent whatever argument they want, cherry-pick any data they want, and continue peddling their politics without ever being called to task by the data.

Even more insanely, doctors are held not only to the standard of evidence-based medicine, but also to that of of the precautionary principle–where passivity is preferred to action and novel methods are treated with special scrutiny. “Evidence-based policy”, on the other hand, is a buzzword and not an actual practice to align with RCTs, and any politician who actually followed the precautionary principle would be considered ‘do-nothing’. Thus, we carefully keep both evidence and principles of ‘do no harm’ far from the realm of political action, and continue a general practice across politics of the blind making sure that they lead the blind.

In sum, political leaders, please ignore Donna. Stop intentionally blinding us to policy impacts. Stop doing triple-blinded studies with the future of our country. Sincerely, all data-hounds, ever.

WatsOn My Mind: Stimulus Multipliers

The problems of trying to actually identify Keynesian spending multipliers is nothing new, but it was brought home to me this last week. You see, my mother-in-law passed away just after her stimulus check arrived. Her children chose to use it to pay for her headstone. Being more familiar with the discussion than most spending, I break it down this way:

Someone in government, trying to figure out how many jobs were created or saved by the stimulus bill, would ask us what we spent the money on. We would tell them it went for a headstone. They might figure out how much the monument workers are paid, how much of that $1200 went to the carvers and how much to the stone itself and multiply it throughout by marginal propensities to consume and any other leakages in the system to come up with a fancy number. (For those of to whom that is all Greek, see Jacob Clifford’s introduction.)

The usual first response to this is to cite the Broken Window Fallacy (introductory video here). That stimulus money had to have come from somewhere. Someone else will be taxed or have their savings inflated away to pay for it eventually, and the first round calculation does not take into account the jobs lost from this confiscatory taxation/seigniorage. Thank you, Bastiat.

The other problem more visible to me than usual is that we (the assembled kids) were totally going to get her a headstone either way. The stimulus check was entirely fungible and it will actually be spent over time with a little bit here and a little bit there because someone in the family has more in their savings account than they otherwise would have. Trying to follow and account for that spending and its effects borders on the well-nigh impossible. Forget the distinction between approximate right and precisely wrong (a quote misattributed to Keynes), it’s not even possible to know if you’re even in the right ballpark!

And those distinctions are still before factoring in monetary offset. Though with Powell begging the government to spend more, you might think that’s less of an issue also, but Sumner responds to that idea in the comments section at the same link.

PS – What did we do with our family’s stimulus check? Far as I know it’s still sitting in the savings account. Our needs are met, so we try to keep our mpc kind of low.

Around the Web

  1. Missing from President’s Day: The People They Enslaved
  2. The Left Still Harbors a Soft Spot For Communism from Cathy Young at Reason
  3. Tyler Cowen on practical gradualism vs. moral absolutism, for immigration and revolution; see also Dr Delacroix’s very relevant “If Mexicans and Americans Could Cross the Border Freely” article [pdf] in the Independent Review
  4. Writing in the Wall Street Journal, James Freeman reviews the results of Obama’s stimulus package five years on
  5. Theologian and philosopher Eric Hall on Confusing Confucianism with Collectivism