Duflo vs. Acemoglu: Randomized social trials or general equilibrium?

Esther Duflo gives a great talk on randomized experiments:




while Daron Acemoglu argues that more general equilibrium analysis and political economy is the way to go. The partial equilibrium results from  randomized trials are often not valid when scaled up:

For example, it may be the case that in partial equilibrium estimation focusing on …firm-level variation we found that …firms with better access to credit expanded, but this was at the expense of other …firms that did not have access to credit (that is, partly by “stealing business” from others).

And yet, the same response cannot take place in general equilibrium. As a consequence, when additional credit becomes available to a large fraction of… firms, total output may not increase by as much or at all.

One could thus imagine a situation in which partial equilibrium estimates of relaxing credit constraints are large, while the general equilibrium effects would be small.

I think Chris Blattman has a good point (as usual) when he suggests that when everybody else is rushing toward randomized trials, the smart thing to do for a young graduate student is to run the other way: towards general equilibrium.