Monday, September 10, 2007

Best Paragraph on Randomization

Randomized trials are very popular techniques these days in economics, here is one non-technical summary of what it's all about:

The sample size is the key. If we get a large enough sample, we can be pretty sure that the group coming up heads will be statistically identical to the group coming up tails. If we then "intervene" to the heads differently, we can measure the pure effect of the intervention. Super crunchers call this the "treatment effect". It's the causal holy grail of number crunching: after randomization makes the two groups identical on every other dimension, we can be confident that any change in the two groups' outcome was caused by their different treatment. (italics in original)

That is on page 49 of Ian Ayres' Super Crunchers.

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