Thursday, December 11, 2014

80% believe that the future mostly depends on their own actions and behaviors

Well this is very interesting, Focusing Behavioral Economics on Development Professionals by Timothy Taylor.
The 2015 World Development Report from the World Bank, with the theme of "Mind, Society, and Behavior," offers an useful overview of the way in which these issues of "behavioral economics" affect the welfare of low-income people around the world. But at least to me, the the single most striking part of the report is that it focuses the lens of behavioral economics not just on people in low-income countries, but also on development professionals themselves.
Excellent.

Most experts perform worse at forecasting than a panel of informed laypeople. Partly that is because the experts lose contextual knowledge that often impact the accuracy of their forecasts. What this report suggests is that another contributor might be that experts (in whatever field) lose sight of influential unacknowledged assumptions to which laypeople are more sensitive.
A final example looks at mental models that development experts have of the poor. What do development experts think that the poor believe, and how does it compare to what the poor actually believe? For example, development experts were asked if they thought individuals in low-income countries would agree with the statement: "What happens to me in the future mostly depends on me." The development experts thought that maybe 20% of the poorest third would agree with this statement, but about 80% actually did. In fact, the share of those agreeing with the statement in the bottom third of the income distribution was much the same as for the upper two-thirds--and higher than the answer the development experts gave for themselves!
I see this all the time among social justice advocates: 1) they fail to acknowledge other important goals and the interplay and trade-off decisions amongst multiple goals and 2) they act on behalf of others without actually understanding the circumstances of those others. Hence the almost uniform outcome of unintended negative consequences despite the genuineness and intensity of the good intentions.

Much of this is touched on by Christopher J. Coyne in his very good Doing Bad by Doing Good: Why Humanitarian Action Fails!

But independent of the failure of development economists to understand those at whom they are targeting their policies, I find it immensely heartening that 80% of all people, rich and poor, believe they are responsible for their own future.

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