The following post is a part of a series that discusses 'mind and culture,' the theme of the World Bank’s upcoming World Development Report 2015.
As a way of reaching out on the core messages for WDR2015, I asked for feedback on Linked In via two groups that I’m a member of -- the International Development Forum and Society for International Development groups. I received the following diverse comments, including from Tunisia, South Africa, Congo Brazzaville, France, Italy, and the US:
It was time! I am impressed that in development literature, classical and practical anthropology is not present. May be they should have listened to Drucker –more well-known than many anthropologists: “culture eats strategy at breakfast”.
I trust the [World] Bank will examine 'rationality' among the poor in the context of recent studies which demonstrate a relationship between the stress of day-to-day life, particularly decision-making, among the poor and the loss of cognitive capacity. See here for a popular discussion of the science. Rules of thumb may replace rationality in decision making by poor people as a means of coping with the stress of repeated daily decisions on actions requiring financial resources a poor person does not have. It may be quite challenging for professional economists to enter the mindset of the chronically poor.
You're completely right : "It may be quite challenging for professional economists to enter the mindset of the chronically poor." These studies are very interesting to understand the causes of poverty and explain the "development of underdevelopment". I think it's also valid for poor people in poor countries and for poor people in rich countries, which are increasingly numerous. Poor in developing countries are accused of wallowing in poverty (unemployed not looking for work, poor families not to care, poor students not to succeed in their studies ...). Economists (and politicians) are too rich to understand the daily lives of poor people. And if you add fear, insecurity, violence, injustice, contempt to poverty, you can easily imagine the impact on mental bandwidth.
Great topic! This is a conversation that's has been long overdue - anyone who has questioned why latent entrepreneurial opportunities in developing countries with (by economic standards) acceptable risk do not get taken up, fail to understand the impact of prospect theory (Daniel Kahneman) or the tall poppy syndrome that is prevalent in behavioral economics and psychology but absent in other field of economics. The irony however is that politicians "get it" intuitively entrenching the perception that democracy in developing counties is entrenched by grant dependency and inadequate education. (dumb, dependent and desperate?)
The study of development as a performance of a rational actor with almost the same paradigms of business models (diminishing inputs, maximizing outputs) has already shown its limits. The introduction of the human development concept, more than twenty years ago, was a major step towards a more adequate theory. This new effort of the World Bank, in a context still marked by the vulnerability of a passing major economic and financial crises and the appearance of significant problems related to the globalization process, could inspire a new wave of fruitful work on development especially in developing countries. But, without necessarily denying the fundamental basic truths of modern economics, the return to the sources of philosophy may be unavoidable: economic thought should be probably based on wisdom (the balance between instincts and mind) with a clear target which is namely to reach happiness. Otherwise the rational actor could lose the guidance in a frenetic search for accumulating gains and profit, which often leads to economic and financial crises on a cyclical basis.
Given that the central argument of the Report [sic] is that “policy design that takes into account psychological and cultural factors will achieve development goals faster," I look forward to the [World] Bank's increased hiring (and non-marginalization) of non-economists. I note that 12 of the 15 non-administrative members of the team are economists and none seems to have a professional or educational background in psychology (not withstanding a mention that one analyst spent a semester studying organizational psychology). Also, I question the use of the word "new" in the following explanation--unless we're talking in terms of geologic time, perhaps. "Economists have long held that the best way to predict human behavior is to assume that people are rational, selfish, and more or less identical. New research shows that this is not necessarily the case." Even within the field of economics, surely Nobel-awarded work by Kahneman, Tversky, and Ostrom suffices to obviate the latter sentence.
The use of scenario building and the connection of logical methodology surfacing human perceptions coupled with analytical methodologies such as mathematical modelling or statistics, is used widely in policy development. Unfortunately the potential of including perceptions/instinct through methodology derived from behavioral science, operational research and behavioral economics, to mention a few, is not as widely appreciated.