ECO 4403 University of Toronto Method of Inquiry in Economics Questions

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ECO 4403

University of Toronto



Answer each of the following in a few sentences. References are to required readings

1. Why is random assignment of participants to control and treatment groups a central feature of lab, social and field experiments?

2. According to Falk and Fehr (2003), what are three objections to lab experiments?

3. Explain how attrition can cause bias in a social experiment.

4. Explain how substitution can cause bias in a social experiment.

5. Explain why the evaluation of the effect of a training program on earnings using a non-experimental study is likely to suffer from selection bias.

6. Match the following description to one type of experiments:

It examines outcomes for observations in treatment groups and comparison/control groups that are not randomly assigned? (a) lab; (b) field; (c) social; (d) natural

7. Consider a situation where researchers use an unusually large change in a province A’s minimum wage to study how it affects employment. They compare the change in employment in province A to the change in employment in province B where the minimum wage is kept constant.

(a) What kind of experiment are they using?

8. Meyer (1995) lists nine threats to internal validity of natural experiments. Describe three.

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ECO 4402- Method of Inquiry in Economics
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ECO 4402- Method of Inquiry in Economics
Question 1: Random assignment in social, field, and lab experiments
In social lab and field experiments, there has been an increased use of a random selection
of the participants utilized in the research process. The random selection process involves the
approach where a sample is drawn from a particular population without any specific order.
When effectively utilized, the approach ensures that each unit in the research has an equal chance
of participating in the research. In the application of the random assignment process, all the
participants involved in the study are provided with an equal chance. For instance, in the case
where we have two participants, there is a 50% chance for each participant's selection. Using
random assignment makes it easier to reduce any incidences of bias in the experiments. The
random assignment techniques also facilitate the effective control of extraneous variables, which
may impact the entire research (Falk & Fehr, 2003). The random assignment approach also
ensures the extraneous variables are controlled to ensure they do not become confounding
Question 2: Objections to the use of lab experiments
The use of lab experiments is associated with different limitations that impact the
experiments' efficiency and the ability to produce the desired results. Based on the research by
Falk & Fehr, different objections were attributed to the use of lab experiments in the research
process. The first objection was based on the impact of demand characteristics on the
experiment's outcomes, as it may result in biases in the outcomes of the experiments (Falk &
Fehr, 2003). The lack of a natural setting used in the lab experiments also affects the
experiments' expected outcomes. The samples used in the lab experiments may not be able to

reflect the true nature of the normal operating environment as a result of the artificiality of the
settings involved in the experiments. Based on the artificiality of the lab settings used in the
experiments, it becomes very challenging to generalize the research outcomes for use in real-life
settings (Falk & Fehr, 2003). The other objection on the use of laboratory experiments is based
on the lack of clarity to determine whether the experiments' results can prevail in reality. Based
on past research, it has been established that lab experiments can be unrealistic; this impacts the
overall outcomes of the experiments (Falk & Fehr, 2003).
Question 3: Attrition and Bias in Social Experiments
Attrition refers to the situation where participants in particular research leave before the
entire research's culmination. In many experiments, it becomes challenging to manage the
experiment's outcomes due to the lack of definite control of the participants. As a result of
attrition, the desired outcomes from a particular experiment are extremely impacted; this affects
both the findings' external and internal validity (Meyer, 1995). The drop-outs in the samples used
in the experiments result in variations of both the initial and ending samples used in the
experiment. Due to attrition, there are variations in the samples used at the beginning and the end
of the experiments. Attrition also results in missing and incomplete data following the
withdrawal of some participants involved in the study. For instance, it becomes challenging to
develop correlations in the collected data as a result of attrition. Therefore, the withdrawal of
some participants from the study significantly impac...

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