By Julian Jamison
One of the World Bank’s flagship publications is the World Development Report, which highlights a different policy-relevant topic every year – often paving the way for novel work on that topic. The latest (2015) report, entitled “Mind, Society, and Behavior” and co-directed by Karla Hoff and Varun Gauri, focused on using behavioral insights from psychology, sociology, economics, and related fields to improve development efforts. It’s hard to argue with the idea that being realistic about how people actually think, decide, and behave when designing policy can be more effective than standard models that use a simpler view of human behavior.
Following on the report, a new unit has been formed within the Development Economics (DEC) research and analysis arm of the Bank. This unit, named the Global INsights Initiative or GINI (http://www.worldbank.org/gini), will – among other endeavors – be putting conclusions from the report into practice. The unit’s official launch took place on October 22 and featured an array of external and internal experts headlined by Duke Professor Dan Ariely. For a full list of speakers, as well as a recording of the event, click here.
The WDR 2015 catalogued three areas of departure from standard economic models: individuals think quickly and indeed often automatically; individuals respond strongly to social incentives; and individuals use mental models or specific worldviews to interpret information and perceptions. These areas overlap (e.g. the first and third are both related to heuristics and mental efficiency; the second and third both have group elements), and there are other relevant departures from standard models, but this provides a useful starting framework not simply for categorizing interventions but also for catalyzing new approaches.
The GINI unit – initially comprised of Gauri, behavioral economist Julian Jamison, behavioral scientist Nina Mažar, and research analyst Christopher Janes – will be working both with internal World Bank project teams and with external government clients. In this context, it is important to note that the concept of mental models (as well as other behavioral insights) applies just as much to policy-makers as it does to those toward whom the policies are directed. One goal of the initiative is to expand the ‘behavioral toolkit’, both substantively and in terms of mental availability, that development professionals and governments (at all levels) have readily at hand.
In addition to the behavioral nudges and choice-architecture interventions that have become commonplace in the behavioral sciences field, such as altering defaults or using social norms, there is the possibility of using ‘behavioral jiu-jitsu’ to turn biases around and use them in people’s favor. For example, one study in the Philippines offered people the opportunity to quit smoking by signing up for a savings account, knowing that six months later they would be tested for nicotine and would lose their money if they failed the test. In this way [over-]optimism and also perhaps time-inconsistent preferences helped more people to quit smoking (and save money) than would otherwise have been the case. Similarly, the concept of “save more tomorrow” promotes commitment to saving a portion of any future salary increases, which always appears more feasible in the present than at the moment they actually occur in the future.
One theme for the new GINI unit will be experimentation and evidence-based evaluation. At the launch, Ariely astutely said, “As you find out how wrong you are, you develop an appetite for experimentation.” Consider what bioscientist Martin Schwartz refers to as “productive stupidity”: once we realize how much we don’t know, it both frees us to try new things and also impresses upon us the clear obligation to test the standard and the new ideas rigorously.
Another theme will be the complementarity between these new behaviorally-informed approaches and the traditional ones. Social incentives are still incentives; people are still trying to live the best lives they can. Sometimes the right answer for fighting poverty will be to tax, subsidize, or build a dam but sometimes – and perhaps often – it won’t be. Determining the right answer – finding the balance between behavioral and traditional approaches – is where GINI will play a key role.