Wednesday, December 10, 2014

Human decision making and development policy

The World Bank has just released a new world development report 2015 entitled Mind, Society and Behavior.  The focus is on behavioral economics.  As an Economist commentary points out (link), these insights apply with great force to the poor—both the poor in rich countries and the more numerous inhabitants of developing ones. Behavioral economics therefore has profound implications for development. 

The new “World Development Report”, the flagship publication of the World Bank, considers them.

As the report shows, the poor are more likely than other people to make bad economic decisions. This is not because they are irrational or foolish but because so much is stacked against them. They are more likely to lack the basic information needed to make good choices, such as which fertilizer to use or when to apply it. They are more likely to live in societies which hold mistaken or harmful views, such as that girls should not go to school.

The full report may be downloaded here.

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