Two Notes on Inferring Long Run Behavior from Social Experiments

Kenneth Arrow

Expert InsightsPublished 1975

Discusses the problem of inferring the long-run effect of a change in price on quantity demanded when price is changed for only a short period of time. The subject was first considered in the New Jersey Negative Income Tax Maintenance Experiment by Charles Metcalf. This paper derives Metcalf's results in a simple fashion and also generalizes them. An application to the Health Insurance Study is presented.

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Arrow, Kenneth, Two Notes on Inferring Long Run Behavior from Social Experiments. Santa Monica, CA: RAND Corporation, 1975. https://www.rand.org/pubs/papers/P5546.html.
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