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Chapter 9: Problem 62

Cash to find work? (5.2) Will cash bonuses speed the return to work of unemployed people? The Illinois Department of Employment Security designed an experiment to find out. The subjects were 10,065 people aged 20 to 54 who were filing claims for unemployment insurance. Some were offered \(500 if they found a job within 11 weeks and held it for at least 4 months. Others could tell potential employers that the state would pay the employer \)500 for hiring them. A control group got neither kind of bonus.19 (a) Describe a completely randomized design for this experiment. (b) How will you label the subjects for random assignment? Use Table D at line 127 to choose the first 3 subjects for the first treatment. (c) Explain the purpose of a control group in this setting.

Short Answer

Expert verified
Randomly assign subjects to groups to test the effect of cash incentives on job return. Use control for comparison.

Step by step solution

01

Define the Completely Randomized Design

In a completely randomized design, subjects are randomly assigned to different treatment groups to ensure that each group has similar characteristics. For this experiment, divide the 10,065 subjects into three groups randomly: one group receives the individual cash bonus, the second group is allowed the employer subsidy, and the third is the control group receiving no bonuses.
02

Assign Labels to Subjects

To randomly assign labels to the subjects, first assign each subject an identifier from 0001 to 10065. This numbering system will be used to pick numbers at random from the random number table (Table D).
03

Use Table D for Random Selection

From Table D at line 127, start selecting random four-digit numbers. Any number that falls within the range of 0001 to 10065 corresponds to a subject. Continue this process until you have selected the first 3 subjects for the first treatment group. For example, if line 127 has numbers 4938, 7204, and 3469, these are the IDs of the first 3 subjects for the first treatment group.
04

Purpose of the Control Group

The purpose of the control group is to serve as a baseline for comparison. By having a group that receives no bonuses, we can compare the employment outcomes of this group with those of the treatment groups to assess the effectiveness of the bonuses in speeding the return to work.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Control Group
In many experiments, researchers need to establish a baseline to evaluate the effects of the various treatments being tested. This is where the control group comes into play. The control group does not receive the experimental treatment, allowing researchers to compare outcomes.
For the experiment conducted by the Illinois Department of Employment Security, the control group's role was crucial. While other groups were offered cash incentives for securing employment, the control group did not receive any bonuses. By looking at the employment outcomes of the control group, researchers can see what happens naturally without any external influence.
  • Baseline Comparison: Employment rates in the control group provide a baseline to gauge the effectiveness of cash bonuses.
  • Measuring Effectiveness: If there is a significant difference in outcomes between the control and other groups, it indicates that the bonuses are making a noticeable difference.
Essentially, the control group acts as a "what if" scenario, helping researchers understand what might occur without intervention.
Random Assignment
Random assignment is a technique used in experiments to ensure that each participant has an equal chance of being placed in any of the treatment groups. This process helps reduce bias and ensures that each group is comparable at the start of the experiment.
For the unemployment insurance experiment, random assignment played a pivotal role in fairly distributing the 10,065 subjects into three distinct groups. This allowed the study to accurately represent different segments, as any inherent differences between individuals are equally likely to appear in each group.
The steps taken in this experiment included:
  • Labelling: Each subject was assigned a unique identifier.
  • Random Selection: Numbers corresponding to identifiers were randomly chosen from a table to form groups.
  • Equal Opportunity: Each participant had an equal chance of being allocated to any of the treatment groups, maintaining balance and impartiality.
This process bolsters the validity of the experiment by minimizing selection biases.
Treatment Groups
Treatment groups in an experiment are those groups of subjects that receive some form of intervention or variable that the experiment seeks to test. In the context of the Illinois Department of Employment Security experiment, there were two primary treatment groups.
The first treatment group was offered a personal cash bonus if they quickly secured a job. The second group was allowed to propose an employer subsidy. These incentives were designed to determine which type of bonus, if either, would most effectively encourage jobseekers to find and hold employment.
Key features of the treatment groups in this experiment:
  • Interventions: Different incentives were tested 鈥� a personal cash bonus versus an employer subsidy.
  • Comparative Analysis: By comparing these groups to each other and to the control group, researchers aimed to identify the most effective method of promoting employment.
  • Outcome Measurement: Success was gauged by the speed and sustainability of employment secured by each group.
Treatment groups are integral to testing hypotheses and uncovering which strategies yield the best outcomes in real-world settings.

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Most popular questions from this chapter

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