Evaluating a Proposed Economic Experiment

A government proposes a large-scale experiment to determine if a higher minimum wage increases unemployment. The plan is to randomly select 50 cities to implement the new, higher minimum wage, while another 50 similar cities will maintain the current minimum wage to serve as a control group. Which statement best identifies the most fundamental challenge inherent in this type of economic experiment?

Fundamental Hurdles in Economic Experimentation

The main reason economists rarely conduct large-scale controlled experiments, such as testing a new tax policy on a randomly selected portion of the population, is the high financial cost associated with such studies.

Match each proposed economic experiment with the primary reason it would be difficult or impossible to conduct as a controlled study.

Critiquing Causal Claims in Economic Policy

An economist observes that cities with more public parks tend to have lower crime rates. To determine if building parks causes a reduction in crime, the ideal scientific approach would be a controlled experiment. However, randomly selecting hundreds of cities and forcing half to build new parks while preventing the other half from doing so is not feasible. Given these constraints, which of the following represents the most logical and common next step for an economist to investigate this potential causal link?

A politician proposes a 10-year nationwide study to test the effects of a universal basic income. The plan is to randomly select 1 million citizens to receive the income, while another 1 million will not, serving as a control group. An economist is asked to evaluate this proposal. Arrange the following steps in the logical order of the economist's critical analysis.

When a real-world event, such as a sudden policy change in one region but not another, creates a situation that mimics a randomized trial, economists refer to this as a ____ ____.

An economist wants to study the causal relationship between different economic factors. Which of the following research questions would be the most difficult, if not impossible, to investigate using a large-scale, randomized controlled experiment?