Robin Hanson points to a fascinating article on the lack of experimentation in business.

This is a typical case, I’ve found. I’ve often tried to help companies do experiments, and usually I fail spectacularly. I remember one company that was having trouble getting its bonuses right. I suggested they do some experiments, or at least a survey. The HR staff said no, it was a miserable time in the company. Everyone was unhappy, and management didn’t want to add to the trouble by messing with people’s bonuses merely for the sake of learning. But the employees are already unhappy, I thought, and the experiments would have provided evidence for how to make them less so in the years to come. How is that a bad idea?

This might go towards answering a question that has puzzled me for some time. Why isn’t the productivity growth rate speeding up? I am sure there are multiple underlying factors but one clear concern is that an increase in the speed of technology development does not seem to be leading to large increase in productivity. At least not at rates that seem plausible.

Some of this is undoubtedly because of changing factor prices. Technology makes manufacturing, for example, more productive but that simply spills extra workers into retail. This drives down wages and makes investments in retail technology less profitable.

Still, you would think that organic technological progress should be speeding up. That is, the rate at which businesses think up new and better ways of doing business. Yet, its not. A reluctance to use methods that have proven so useful in scientific development may be part of the reason why.

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