A/B testing the world; yes, even the Italian tax system.
Disclaimer: this is not a post about politics.
For those who are not familiar with the terminology, let’s start giving some context on what A/B test means. It’s all about creating two versions of a product and see whether A performs better than B or vice versa.
As long as you have clearly defined what success looks like, you can rule out which option helps achieve your goals.
You have examples of this tens of times in your daily usage of any technology.
Try this. Get the closest five people around you in this very moment and ask them to open their Facebook account. You can bet you will see at least three different version of the same product. I don’t mean regarding contents, that, of course, will be personalised, but concerning the layout and features that Facebook will be presenting to the users.
Facebook is continuously testing and measuring what is best to generate more eyeballs on ads; frankly speaking.
The subject of an A/B test can be anything from a small feature like the colour of a button to a whole new product.
Why we A/B test and why this helps tech companies? To fail fast.
This is one of the first rules in the book of any tech company. Creating a successful product in any market or industry takes time and effort, which, in the end, means money. Most of the time, if not every time, you need a lot of iterations to find a solution to the problem you are trying to solve.
This is true in any industry, from the thorough testing of pharmaceutical companies to the extensive tests of a new car.
You can try to reproduce all the conditions in a theoretical environment, but nothing compares with the “Real McCoy.”
If your product or, let’s say, a given version of your product does not work, then you definitely want to know before you spend millions on developing it. You make the hypothesis and you test it one after another, then your product takes shape.
A/B testing is not just a tech company’s process; it is inherent in human nature. One example that always generates laughs during my presentation is about marriage.
Usually, and I repeat, usually, you don’t get married to the first person you date. You A/B test the other person as much as she is testing you. You take her to the movies, to dinner, and you test what will it be like to spend more time with her. If you have the hypothesis that your marriage might end up in a divorce, again, you want to know before buying an engagement ring.
Let’s assume we know what A/B testing means. Let me make my point now.
Recently, the new Italian government proposed a new bill on taxes. It is proposing a flat tax.
The hypothesis is the following: if anyone pays fewer taxes, then everyone will be keen to pay them.
Italy, like many other countries, bases its economy on the taxes paid by the middle class. Low earners pay few and use public services more, whereas wealthy or super wealthy people tend to find ways to not pay taxes.
I like the hypothesis, and even if it might not be fair, in the long run, it can potentially solve a few issues to achieve an Italian balance.
What if the hypothesis proves wrong?
What if the people who pay are the same, but now they pay less?
Can Italy go bankrupt?
This seems to be a riddle that can be solved with some tests!
We already ruled out that testing is part of human nature; then why not test the hypothesis that adopting a flat tax rate will increase the total income coming from taxes while making people happy because they individually pay less?
Rather than risk a whole national crisis if this does not work, let’s test it in one region.
You start with a small region in the centre like Molise. It might be small enough to mitigate the risk of losing too much money. You adopt this new regime for one year, and you judge the results. If the results are encouraging, then you roll it out to another region, maybe a bigger one.
In case of bad results, you go back to the drawing board while absorbing the loss of a small region with the rest of the population’s taxes.
At the end of the second year, you continue moving your product (a nation) forward, and you eventually roll out a flat tax solution to the whole country.
Is the bill that you started testing the same one you rolled out? Not necessarily, and to be fair, it’s very unlikely. During your tests, you optimise and make the solution better; that’s the whole point.
Life is about change; we have to adapt.
Past civilisations were reading tea leaves or coffee grounds to gain insight into the future. Testing, in all its forms, does not allow us to foresee the future but is the best way we have found so far to minimise the risk of change.
Let’s do it; let’s test!
F.
