I think a country that is more than $500,000 in debt per household should not send out checks to taxpayers to try pretend they are doing something to help the economy. Just as I wouldn’t think some family with $20,000 in credit card debt should fix the problem by taking the family on a new credit card financed vacation. But if you are going to do so, then take Dan Ariely’s advice: Stimulus options should be tested first. His blog post on the topic, Do we know enough to give stimulus packages?
The next question, of course, is which delivery method to select. Here behavioral economics has been instructive as well. In particular, years of research have demonstrated over and over that our intuitions about the relative effectiveness of different approaches are often wrong. Given that the method of delivery could make a large difference, and given that our intuitions about their relative effectiveness could be wrong, what should we do?
One answer is to conduct an experiment, as this is the only method we have for testing what really works and what is likely to fail. In the same way that we force drug companies to test the efficacy of their drugs before rolling them onto the market, shouldn’t we ask the government to first test their ideas before they invest billions of dollars of our tax money on some stimulus packages?
Related: Politicians Again Raising Taxes On Your Children – Charge It to My Kids – Google: Experiment Quickly and Often