Overview of the Final Report of the Seattle-Denver Income Maintenance Experiment. The Propositions to be Tested

05/01/1983

In order to test whether something is the cause of something else, it is important not only to define the treatment and the hypothesized effect clearly and unambiguously, but also to be able to spell out the logic of the mechanism connecting the treatment to the hypothesized effect.  If the issue of policy interest cannot be given prior shape in this manner, the unique analytic strength of the experimental approach is not worth its expense.

The primary focus of SIME/DIME — the effect of income maintenance on work effort or labor supply — was a good subject for experimentation from this point of view.  Economists had developed a rigorous and widely accepted theory of how changes in effective wage rates and unearned income caused changes in individual labor supply, i.e., the number of hours people worked.  The direction of the expected experimental effect was clear and so was the expected cause-effect mechanism.  An increase in unearned income or a decrease in the effective wage rate were hypothesized to lead to decreases in labor supply.  By the late 1960s, analyses of non-experimental survey data had yielded numerical estimates of the magnitude of such decreases.  However, the wide range of available estimates suggested that social experimentation was an appropriate research strategy to improve the accuracy of the numerical estimates.