Last week, I attended a conference at the Rotman School of Management at the University of Toronto. It was BAD, and it was primarily about gender. (By BAD, I of course mean it was about “Behavioral Approaches to Diversity”.) The topic is obviously relevant to World Bank goals, both internally and for our clients, and to the work of the Mind, Behavior, and Development Unit (eMBeD). Here are some selected highlights.
This is the first in an occasional series of blogs on social boundaries and identity. I’m interested in the topic for obvious reasons. Social boundaries and identities, at least in some forms (and that is the rub!) have been argued to affect generalized trust and/or prejudice, governance and cooperation, and development outcomes. They may also be relevant to certain recent political developments. Here at the World Bank, the Mind, Behavior, and Development Unit (eMBeD) is involved in projects that aim to support social cohesion.
In the first part of this blog, I went down memory lane and told you about my teenage years and how my parents had managed to make sure I abstained from tobacco by offering to pay for a high school graduation trip if I did not take up smoking.
When I was a teenager in Belgium, my parents wanted to make sure that I wouldn’t become a smoker. At the age of 15, I had tried a few cigarettes with friends and they were worried I would pick up the habit. They could have organized a complicated system of surveillance and sanctions to monitor and prevent my smoking behavior. Instead, my dad offered me a very simple deal: “if you are not smoking by the time you graduate from high school, I will pay your trip to a destination of your choice in Europe during the summer before you start college”. My dad’s deal worked well: I took a great trip to Greece – my first flight – with a few friends and I have never smoked after those first cigarettes at 15.
As behavioral scientists to the World Bank, we at the Mind, Behavior, and Development (eMBeD) Unit tend to see behavioral science everywhere. With the holiday season fast approaching, it’s no surprise that we can apply behavioral science to any number of seasonally appropriate channels, including charitable giving. Reciprocity, it turns out, affects us at every age, and can be a good lesson for charitable giving campaigns.
You could say that the first one began in 2009, when the US government recruited Cass Sunstein to head The Office of Information and Regulatory Affairs (OIRA) to streamline regulations. In 2010, the UK established the first Behavioural Insights Unit (BIT) on a trial basis, under the Cabinet Office. Other countries followed suit, including the US, Australia, Canada, Netherlands, and Germany. Shortly after, countries such as India, Indonesia, Peru, Singapore, and many others started exploring the application of behavioral insights to their policies and programs. International institutions such as the World Bank, UN agencies, OECD, and EU have also established behavioral insights units to support their programs. And just this month, the Sustainable Energy Authority of Ireland launched its own Behavioral Economics Unit.
Could a parent’s decision to vaccinate a child depend on a free bag of lentils? The premise seems implausible:immunization can be a matter of life and death, and a bag of lentils is worth only a dollar. Yet a randomized controlled trial in India showed that a gift to parents of a 1 kg bag of lentils and a set of plates can dramatically raise the percentage of children protected against major disease (Banerjee et al. 2010). Providing a quality immunization camp alone increased the percentage of fully immunized children from 6% to 18%. The addition of the lentil and plate ‘incentives’ raised the figure to a whopping 39%. How can we explain the outsize effect of a gift of everyday household items?
Monday’s announcement of the 2017 Nobel Prize for economics, to Richard Thaler, for his groundbreaking work incorporating psychology into economic theory, was a victory not only for the University of Chicago Professor and co-author of Nudge: Improving Decisions about Health, Wealth, and Happiness, but for behaviorally-informed policy worldwide.
It has been almost ten years since Richard Thaler and Cass Sunstein wrote Nudge, but the revolution in behavioral policymaking is still unfolding.
Around the world, behavioral economists and policymakers strive to show that a richer model of human behavior can improve both individual and social welfare in virtually all domains of society.
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.