I always try to reduce things to three questions—even in simple interventions like passing out nutritional supplements to infants and toddlers. These are theory-driven questions that you should be using whenever you’re justifying any intervention whatsoever.
And the questions are
- “What’s the market failure? Why isn’t the market and the invisible hand working?”
- “How does this intervention specifically solve the market failure?”
- “What’s the welfare impact of solving the market failure?”
Karlan makes the point that experiments should absolutely be driven by theory. But theory doesn’t have to mean three pages of math. The theory can be simple, and the questions above sum up what your theory should predict.
from Tim Ogden’s interview with Dean Karlan in Experimental Conversations: Perspectives on Randomized Trials in Development Economics