The World Bank’s conference on “The State of Economics, the State of the World” was an opportunity to take stock of the emergence of new paradigms for understanding economic development. Following Ken Arrow’s talk on the history of the neoclassical model and Shanta Devarajan’s comments on this model’s centrality in the Bank’s work, I had the opportunity to discuss two paradigms of how individuals make decisions that have recently emerged in economics, drawing on psychology, sociology, and anthropology.
If there’s one common theme that resonates across Western democracies this past year, it’s a rejection of the status quo. Some outsider politicians have ridden this wave of populism to political office or to strong second-place finishes, stretching the boundaries of political expression. Frustration, anger with the status quo, globalization and the tradeoffs that come with it, and inequality are all basic concerns of the voters catapulting these politicians to power.
Globally, it also seems that fault lines have been erected between cultures, religions, genders, and so on.
Regardless of where the frustration comes from, though, polarization along ideological lines and negative rhetoric are pervasive. While polarization is a complex issue (and not something we can explain in its entirety in a blog post), how people process information is a significant factor.
If people are not open to other viewpoints or do not think critically about the negative rhetoric they encounter— which often involves self-reflection— then how can change really be achieved? How can the frustration fueling the polarization be addressed if we cannot compromise?
Preventing and controlling HIV is essential to ensuring that everyone can lead healthy, productive lives. It is essential to address this disease if everyone is to share in global prosperity. The international community has made significant gains in fighting the spread of HIV as well as in increasing the survival rate of those already infected.
However, women- and in particular young women- remain vulnerable to contracting the disease. According to The Gap Report from UNAIDS, adolescent girls and young women account for one in four new HIV infections in sub-Saharan Africa. Globally, there are about 16 million women aged 15 years and older who are living with HIV, and 80% of them live in sub-Saharan Africa. Within this region, women acquire HIV infections at least 5–7 years earlier than men, primarily through heterosexual transmission. While there is some research that younger women are more physiologically vulnerable to HIV, the evidence also points to several non-physiological factors that help account for gender inequalities, including inequalities in education and economic opportunities, vulnerability to intimate partner violence, and women having sex with older men.
Discussions of who mankind is usually begin with stories of small bands of hunter-gatherers roaming the savannah and struggling for survival under the African sun, of great feats of strength at the Olympics, or of monumental hurdles overcome to land on the moon. They do not usually start like this: hundreds gather in a Mediterranean city to schmooze and discuss the fate of millions of others. But this event is a quintessential story of who we are as human beings. The World Humanitarian Summit demonstrates the very human characteristics of cooperation and competition.
Michael Tomasello, Director at the Max Planck Institute for Evolutionary Anthropology in Germany and author of Why We Cooperate, has explored the distinctiveness of human nature for decades. He and his colleagues suggest that one of the defining characteristics of humans is that we cooperate. Many species, from ants to dolphins and primates, cooperate in the wild, but Tomasello has identified a special form of cooperation that is truly human. In his view, humans alone are capable of shared intentionality—the ability to intuitively understand what another person is thinking and act toward a common goal.
Have you ever been in an argument that ended badly, after which you expected to receive an apology? Did the apology come or was the other side also expecting one? Have you ever done an audit or technical assessment and wondered how a team of professionals could have come to such seemingly erroneous conclusions? How can that be? How is that people can have such different views of the same thing?
One reason misunderstandings occur is that people tend to be naïve realists. That is, we believe that we see social interactions as they truly are. Anyone else who has read what we have read or seen what we have seen will naturally perceive them the say way as we do… that is, assuming they’ve pondered the issue as thoughtfully as we have. In short, our own reality is true, so those who disagree with us must be uninformed, irrational, or biased.
However, one of the most enduring contributions of social psychology is the understanding that two people can interpret the same social interaction in very different ways, based on their own personal knowledge and experiences.
Tim Harford, the Undercover economist at the Financial Times, recently wrote about naïve realism, calling it the, “seductive sense that we’re seeing the world as it truly is, free of bias.” He goes on to say that this is such an attractive illusion that whenever we meet someone that contradicts our own view, we instinctively believe we’ve met someone who is deluded rather than question our own rationale.
A colleague of mine recently told me a story about a friend of hers with a very long beard who was asked one day, “How do you sleep with all that hair?” The man, who had never given it much thought, shrugged at the question. However, he later confessed to my colleague that since the question was posed he was losing a lot of sleep.
This man has fallen into a common mental trap: once a thought occurs to you, it’s very difficult to suppress it, and trying to suppress it may make the thought stronger.
This mental trap has a long-running history in our social consciousness. Leo Tolstoy once said he tried to play a game in which he would, “get into a corner and endeavor, but could not possibly manage, not to think of the white bear.” This was later echoed by Fyodor Dostoyevsky who lamented that “Try to pose for yourself this task: not to think of a polar bear, and you will see that the cursed thing will come to mind every minute. So how is it to be done? There is no way it can be done…"
These observations would later inspire social psychologist Daniel Wegner, PhD at Harvard University. Wegner is considered to be the founding father of thought suppression research, and was inspired to look into thought suppression after reading Dostoyevsky's quote more than 25 years ago.
Why do women tend to make less money and occupy fewer management positions than men? Do social influences affect the competitive spirits – or lack thereof – women? Or could it be that women are simply less competitive than men?
With support from the National Science Foundation, Uri Gneezy Kenneth L. Leonard, and John A. List, set out to test assumptions about biologically based competitiveness in two of the most culturally different places on the planet: the ultra-patriarchal Masai tribe of Tanzania and the matrilineal Khasi people of northeast India. The researchers conducted experiments in both environments to see what they could unearth regarding the competitive spirit of women across extremely different societies that held women in diametrically opposite roles.
Dishonesty is usually something we think about at the individual level. Lies are errant, definite actions that individuals perform at specific moments.
But lies are also important in aggregate because the effect of many small lies taken together can be devastating.
Dan Ariely, a Professor of Psychology and Behavioral Economics at Duke University, and his collaborators, starting in 2002, conducted a series of studies called “The Matrix Experiments”. In this experiment, the team gave participants, men and women from different age groups, 20 simple math questions. They asked them to solve as many questions as they can in five minutes and promised to reward the participants $1 for each problem solved. After five minutes, the participants are instructed to count how many problems they solved, insert their answer sheets into paper shredder machines, and report their results to one of the test supervisors to receive their cash. They did not need to show their answers as a proof. What the test takers did not know was that Ariely’s team programmed the shredders in such a way that they only shredded the margins of the papers while the main body of the page remained intact.
In the end, Ariely and his colleagues found that very few people lie a lot, but almost everyone lies a little. They tested over 40,000 people and found that only a few dozen were “big cheaters” who claimed to have completed many more problems than they did. Conversely, more than 28,000 people, or nearly 70 percent, were “small cheaters” who, on average, solved four problems but reported to have solved six.
What is interesting to note is that the sum of the team’s losses to so-called big cheaters was a total of $400. Compare this to the few dollars each that “small cheaters” stole. Together, these small transgressions added up to a whopping $50,000, causing a much higher impact than the few bad apples.
It is now the second week of 2016 and many people are working (or struggling) to follow through on their New Year’s resolutions. Whether they have decided to run a marathon, travel more, or save money, many people endeavor to create positive, new habits while shedding existing habits they think are less positive. These resolutions, though, tend to last one or two months, fading into the backgrounds of their consciousness as spring arrives.
It’s a typical combination of the planning fallacy, unrealistic optimism, and a bit of self-regulatory failure.
And this sort of challenge is not specific to New Year’s resolutions or even to issues pertaining to individuals. City councils frequently draw up budgets that are too lean, road construction frequently lasts much longer than expected, and advances in technology often require much more investment than planners expect. So what’s at work here? Why is it that people have a hard time judging the amount of time, energy, and resources that a project will take?
This weekend, the movie The Martian opens. It’s based on a book by Andy Weir, the most exciting one I’ve read this year. In the very near future, a mechanical engineer and botanist turned astronaut named Mark Watney gets marooned on Mars, with little hope that he can survive long enough for a rescue team to reach him. The narrative proceeds on two paths, with Mark showing amazing resourcefulness to extend his survival on a barren planet, and the U.S. National Aeronautics & Space Administration (NASA) at home, scrambling to come up with a plan to save him.
At one point, Mark ponders a big question: “The cost for my survival must have been hundreds of millions of dollars. All to save one dorky botanist. Why bother?” (He gives an answer, but I’m pretty sure it’s wrong.)
Throughout the book, I pondered the same question. The researchers at GiveWell.org estimate that you can save a life through a long-lasting insecticide-treated mosquito net for $3,340. A program of community health promoters in East Africa is estimated to save a child’s life for $4,400. By those estimates, instead of saving Mark Watney (and let’s assume that it cost just $100 million), NASA could have saved almost 30,000 people with mosquito nets or almost 23,000 children through community health promoters.
Beyond the requirements of a thrilling piece of science fiction, why would we make that choice?