policymakers demonstrate

Developments in Data for Economic Research 597
that is, policies used to bring unemployed back to the labour market, is that the
benefits obtained by the beneficiaries of these policies come at the expense of
workers who do not have access to these programmes. This concern has been
around for long but, until recently, the presence of this effect or its magnitude
had not been measured. Crépon et al. (2013) developed and implemented an
experiment to address this question. The design was based on a double randomization.
In a first step, markets were selected to develop or not the programme,
generating ‘test’ and ‘control’ markets. In a second step, a fraction of the potential
participants in test markets were randomly assigned to the programme and
some to a control group. Comparing potential participants in the control group
in test markets and control markets has shown that there is indeed a displacement
effect and that it is substantial. Results showed a substantial improvement
in the employment situation of beneficiaries, but no improvement of potential
participants in test markets as a whole compared to control markets.
A final example is related to price incentives. One general belief is that for
a price policy to have an impact, it has to substantially change financial incentives.
For example, if it comes to subsidizing a product, the subsidy has to be
large. RCTs have shown that this is not necessarily the case: large impacts can
be obtained from very small incentives. One example is immunization programmes.
These programmes often face the challenge that participation is low.
Too few people start the immunization and/or too many drop out. In the context
of an immunization programme for children in rural India, Banerjee et al.
(2010) found that even a reward as small as one kilo of lentils considerably
increases participation. The authors tested two different treatments. In 30 villages
they installed reliable immunization camps and in 30 other villages they
installed the same type of immunization camp combined with small incentives
(one kilo of lentils for each child for each show-up). 74 villages served as control
group. The authors found that twice as many children finished the immunization
programme when it was combined with small incentives relative to
when it was not.
New Developments and Outlook for RCTs
Faced with a policy design question, policy-makers have many ways to try to
answer it. All these potential answers are based on ideas about mechanisms
at play and on views about what matters or not. Simultaneously, there is a
demand from policy-makers to learn about the impact of their programmes.
RCTs are increasingly used to meet this demand. They have shown that not all
the solutions work, that some beliefs about programme efficiency and underlining
mechanisms are incorrect. They have also shown that the consequences
of mistakes can be of first order importance.
RCTs allow accumulating two types of knowledge: about programmes that
work or not, but also about mechanisms at work or not. This knowledge