Varun Gauri, Senior economist, World Bank; David Halpern, Chief executive, Behavioural Insights Team
Development economics and policy are due for a redesign. A more realistic understanding of how human beings think and behave can make development policies more effective, and can help development professionals become more aware of their own biases.
A great deal of development policy aims to supply the resources and information people require in their voyage through life. While such an approach is often appropriate, it is also incomplete. People are not perfect calculators of costs and benefits. They rely on heuristics and mental shortcuts. They are influenced by social norms and culture. Poverty is not simply a state of material deprivation, but also a “tax” on cognitive resources that affects the quality of decision making. Fortunately, policies can often be made more effective by simple changes in design, framing and delivery. Recent research from psychology and sociology together with new experimental methods in economics shows how. The 2015 World Development Report interprets this research to formulate many simple lessons for policy making and implementation.