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Comment by astine | Hacker News Reader

Fair enough, but how would you rigorously test economic principles without ruining the lives of millions?

I see some possibilities to test hypotheses like "$MEASURE will achieve $GOAL"

a) Gather historical data where $MEASURE was attempted and see whether $GOAL was reached. This can give results like "$MEASURE is positively correlated with achieving $GOAL".

b) Test it on a smaller scale. Instead of reforming the entire health-care system, search for something small but similar to reform.

c) simulate. Build a simulation of economic subjects and, before simulating the Friedman health-care reform, test it on past scenarios whose outcome is known.

These usually just result in people picking holes in the dataset/experiment/simulation -- and rightly so; circumstances change too quickly for historical data to be much use, simulations necessarily have some severe assumptions, and small-scale tests don't simulate macroeconomic effects very well.

This is the reason that I've long classified macroeconomics in with religion: they're both very influential ideas, but neither are really based on any evidence.

Hmm yes... fairly quickly, one runs out of large rich countries at the beginnings of twenty-first centuries to draw parallels from.

I liked A Mind Forever Voyaging, though, which is about an attempt to do c) properly.

First use historical statistics and if possible, historical examples of the ideas being implemented. What the article presented was not much more than circumstantial (costs are going up, we have these programs, therefore these programs are causing costs to go up). If the evidence seems sound by an independent advisory board, have a pilot program put in place at one hospital, one city, or one county and carefully monitor the results. If proven successful in those trials, expand further.

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