The respective value of theory and of field experiments

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This is Antoinette Schoar of MIT.

On theory:

Theory is a way of organizing your thinking. In the end it’s setting up a hypothesis so that you have something to test. That’s why I also think that theory is most useful when it gives enough structure that it can actually allow you to refute hypotheses. The most frustrating theories are the ones that are so flexible that they fit any finding. This doesn’t help me to make better sense of the world. But it’s important to start from a theoretical framework rather than just a story because it forces you to be more precise. I think of myself primarily as an empiricist, so theory to me is very helpful when it helps me to unearth new empirical insights.

On field experiments:

What I really like about running field experiments is that even if you’re working with one bank or one NGO because you have to engage with the organization to implement something on the ground, if you want to do a good job, you have to get involved in the details. Which means that you get constant feedback on what is feasible and what is implementable or what is practical and what is just a pipe dream. What sounds great in an ivory tower may be impossible in the real world.

Of course, there are many more things in economics than theory and field experiments, but they are two important things.

From Tim Ogden’s Experimental Conversations: Perspectives on Randomized Trials in Development Economics 

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