If you have been following along here, you have seen this about development and “culture”,
See this post Culture is Key to Development.
See this post Culture is Key to Development.
And about behavioral economics and our “irrational” behavior.
See this post on Thinking, Fast andSlow.
See this post on Thinking, Fast andSlow.
The World Bank has wrapped these together with great results. Check out this report summary:
David Brooks commented on this in his column, as “smallmiracles”.
http://mobile.nytimes.com/2014/12/12/opinion/david-brooks-in-praise-of-small-miracles.html
http://mobile.nytimes.com/2014/12/12/opinion/david-brooks-in-praise-of-small-miracles.html
I think this is a BIG DEAL! The UN Millennium DevelopmentGoals were intended to eliminate world poverty. They were based on
research by Jeffrey Sachs and others, and the premise that people just need a bit of help
getting over the “hump” as it were, in order to develop their own economic well
being. But it did not work out so well. People really do not make “rational”
economic decisions. In important things like economics, food, and our general
well being, we make emotional decisions. And we make them quickly and with
firm commitment. Appealing to our rational self actually makes us even more
entrenched in those decisions. The UN has undertaken a new effort now to create
Sustainable Development Goals. The UN has developed a very challenging set of goals, and some wonderful graphics for them.
This World Bank study is very much in support of this new approach. It adopts the behavioral economists’
approach of “nudging” or “going with” and “using” our built in psychological propensities,
instead of arguing against them. This could work!
Just for one example, cited by Brooks:
Too many people die in auto
accidents. When governments try to reduce highway deaths, they generally
increase safety regulations. But, also in Kenya, stickers were placed inside
buses and vans urging passengers to scream at automobile drivers they saw
driving dangerously.
The heckling discouraged dangerous
driving by an awesome amount. Insurance claims involving injury or death fell
to half of their previous levels.
AND – gold stars work better than economic incentives:
In Zambia, hairdressers were asked
to sell female condoms to their clients. Some were offered financial incentives
to do so, but these produced no results. In other salons, top condom sellers
had a gold star placed next to their names on a poster that all could see. More
than twice as many condoms were sold. This simple change was based on an
understanding of the human desire for status and admiration.
The summary introduction to the report actually says it more
positively and clearly:
To inspire a fresh look at how
development work is done, the Report outlines three principles of human
decision making: thinking automatically, thinking socially, and thinking with
mental models. Much of human thinking is automatic and depends on whatever
comes to mind most effortlessly. People are deeply social and are influenced by
social networks and norms. Finally, most people do not invent new concepts;
rather they use mental models drawn from their societies and shared histories
to interpret their experiences. (Page 2)
Outstanding. Automatic thinking – the FAST brain. Social influence
– culture and psychological defense. Mental Models – world view, tradition,
conservatism, risk avoidance. I love it. Finally, we might get somewhere with
all of this.
Here’s one example of a study on the affect of poverty in
children. It’s not just the nutrition!
Poverty in childhood, which is
often accompanied by high stress and neglect from parents, can impair cognitive
development, according to the report, so public programs that provide early
childhood stimulation are critical. A 20 year study in Jamaica found that a
program aimed at altering the way mothers interacted with their infants led to
an increase in earnings by 25 percent once those children became adults, as
compared to others who did not participate in the program.
The full report is also available at the web page cited above. If
you care about world poverty, about development, about economics – give it a
look! At 200 pages, it is going to take me a while to digest this. I'll share more insights as we go along here. Do you have some?
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NOW – if we could just figure out how to persuade people to
make better political decisions. How
might that be done?
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