The Experimental Turn in Economics: A History of Experimental Economics

Abstract

The emergence of experimental economics in the last third of the 20th century revisited the long standing belief that economics is a non-experimental discipline. By experimental economics I denote the field within economics that from its beginnings in the 1960s and early 1970s has continuously studied economic phenomena and theories through the application of the experimental method. Experimental economics went further than simply introducing the practice of economic experiments. It was above all about redefining the relationship between economic theory and rigorous data. Replicable data that were specifically created to satisfy conditions set by theory in controlled environments could become a trustworthy partner of economic theory. This was in no sense a surrender of data to the needs of theory. The goal was to elevate data from their subservient position, acquired in postwar economics, and put them on the same footing as theory. Data gathered under the control of economists with the above desired qualities could not be avoided by theorists or explained away as irrelevant to economic theory. This attempt to reconceptualize the relationship between economic theory and rigorous experimental data lies at the heart of what I call the experimental turn. The term ‘the experimental turn in economics’ is used to organize and interpret a set of changes that economists and the practice of economics underwent as it became an experimental science. This term is the most important contribution of my dissertation to the history of economics. The second half of the 1980s is the crucial period for this transformation. Earlier economics problems were occasionally addressed by the experimental method. The ingredients of what I denote the experimental turn in economics had been also present. However they never had come together and neither had a lasting impact on economics. From time to time there had been economic laboratories and the relationship between economic theory and data had been investigated. Such episodes include agricultural economics experiments of the 19th century, managerial experiments, time and motion studies in the interwar period and experimental gaming shortly after WWII. Yet that they had not led to acceptance of the experimental method by the rest of the economics profession. This only changed in the late 1980s and early 1990s. These ingredients or as I call them the four driving forces of the turn included: 1) integrity - A conceptual reconfiguration of what counts as data and evidence in economics; 2) rigorousness - personal collection of data under controlled conditions; 3) the virtuous circle - the realization that experimental research is most potent when it goes in tandem with economic theory; and 4) symmetry - placing experimental data on a par with economic theory.