Economic Experiments for Policy Analysis and Program Design: A Guide for Agricultural Decisionmakers

Economic experiments can help inform the design and implementation of government policies, especially newly conceived or novel policies. This report reviews experimental methods, with a focus on when and how they can be effectively used to inform agricultural program decisions. To illustrate the capabilities of experimental methods, five case studies are presented. First, a laboratory study examines whether it is possible to improve the cost-effectiveness of auctions similar to those used in voluntary land retirement programs. A second laboratory study, with both students and farmers, illustrates how a combination of targeting and bonuses may be able to improve environmental outcomes by encouraging coordination among conservation program enrollees. The third study, conducted in the field to more closely mimic real-world conditions, measures how farmers trade off current income against future income and finds farmers will accept less money if paid today rather than in the future. The fourth and fifth studies are randomized controlled trials testing the marketing of USDA programs; these show how outreach letters can increase participation in the Conservation Reserve Program and in county committee elections