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The World Bank recently launched its flagship ‘World Development Report,’ (WDR) and it’s surprising. As the guy who runs a Blog called “There are Free Lunches,” my immediate thought when seeing the report was: Aren’t the guys from the World Bank the ones who believe that people are rational self-interested agents, and that money is the solution to all the problems in the world? But soon I realized had been caught by the subtle but powerful forces of the availability heuristic, a mental shortcut people use when they have to make judgments under conditions of uncertainty. The heuristic entails basing judgments on scenarios that immediately come to mind, rather than on using all information appropriately. Thus, the ideas that immediately came to my mind when I thought about the World Bank were: money + loans + poor countries. Only when Varun Gauri, co-director of the report, told me they were “launching a new report that reviews exciting, early efforts to diagnose and solve psychological, cognitive, and social constraints to development economics and policy.”, I understood I had been fooled again by one of the many psychological and social shortcuts that, although evolutionary useful, nowadays bias our minds, govern our lives, and determine the faith of our societies and economies. In the following paragraphs we will be able to understand, through several examples picked from the WDR 2015, how small and low cost government interventions can tackle these biases and generate large development benefits.
Can Simplification of the Voting Procedure Increase the Welfare of the Poor in Brazil?
In Brazil over 30 percent of votes were blank or error ridden and were therefore discarded. For the 42 percent of adult Brazilians who had not completed fourth grade, the demands of voting by writing down the names of the candidates in paper ballots were heavy. In 1998, Brazil introduced electronic voting technology which allowed seeing a photo of the candidate selected, and provided step-by-step directions that reduced the probability of errors. The intervention reduced the number of error-ridden and undercounted votes among the less educated. Because of that, there was an increase in the political strength of the parties on the Left, and the state spending on public health care increased by 34 percent over eight years. This shift in the funding enabled 20 percent more uneducated pregnant woman to make regular prenatal visits and improved newborn health (reducing the prevalence of low eight births by 6 percent).
Can Small changes in Colleges Application Process increase Low-Income Students attendance of Selective Universities?
When in 1998, a popular university readiness examination (the ACT) increased from three to four the number of free score reports that test takers could send to colleges and decreased the cost of sending additional reports to $6, students sent substantially more reports. The change in behavior was the same for low and high-income students, which suggests that the students’ choices were not based on a deliberative decision that weighted benefits and costs, but instead on unthinking acceptance of a default option. When the number of reports the students could take for free increased from three to four, the number of test takers sending exactly four reports jumped from 3 percent to 74 percent. This originated that low-income students applied for and attended more selective colleges, which increased their projected average lifetime income by roughly $10,000, far outweighing the $6 cost of sending an additional score report.
Can Stickers placed in Kenyan minibuses reduce traffic deaths?
Every year, about 1.25 million people die from traffic accidents – more than twice the number of victims from war and violence combined. In Kenya, many of the people killed are passengers in minibuses, and people are aware of the danger. Researchers decided to try an inexpensive behavioral intervention to reduce accidents. Stickers posted in the buses to encourage passengers to “heckle and chide” reckless drivers. The intervention was a remarkable success. Insurance claims involving injury or death fell by half, from 10 percent to 5 percent of claims. The cost per year for a life saved was about $5.80, making the program even more cost-effective than childhood vaccination, one of the most cost-effective health interventions available.
What is the relation between Criminal Identity Salience and Dishonesty in Prison Inmates?
A study in a maximum security prison in Zurich, Switzerland, found that increasing the salience of an individual’s criminal identity increased his dishonesty. The prisoners were asked, in private, to report the outcomes of flipping 10 coins and were promised that they could keep those coins for which they reported “heads,” while they had to return the coins for which they reported “tails.” Before flipping the coins, the prisoners filled out a survey. Randomly, prisoners received a survey that either included questions about their prisoner identity or that did not. Cheating was 60 percent higher in the criminal identity group than in the control group. The results support the interpretation that individuals in the Zurich coin-flipping game were made more dishonest by the context that made their criminal identity more salient in their minds.
Can we Adjust Fertility Rates through Soap Operas?
When people who have not been exposed to societies with low fertility were exposed to engaging soap operas about families with few children, fertility rates declined. The impact of exposure to long-running serial dramas in Brazil, which deliberately crafted soap operas with small families to bring about social change, was large and immediate. The fertility decline across municipalities in Brazil began after the first year the municipality had access to TV soap operas. The decline was especially great for respondents close in age to the leading female character in at least one of the soap operas aired in a given year, which is consistent with a role model effect.
Can we originate Long-term Improvements in Earnings through Early Childhood Stimulation?
A program in Jamaica sought to develop cognitive, language, and socioemotional skills in disadvantaged toddlers. The program of home visits to mothers and their toddlers in Kingston targeted stunted children in poor communities. Over two years, community health aides held one-hour play sessions using a curriculum that promoted high-quality interactions between mother and child. Twenty years later, a follow-up study found that the two-year program of home visits to the toddlers improved long-term outcomes; it closed the earnings gaps between the disadvantaged children and a better-off group. For these disadvantaged children, the program broke the intergenerational transmission of poverty.
Can we use Reciprocal Cooperation to Tackle a Water Supply Crisis?
When a tunnel providing water to the city of Bogotá partially collapsed in 1997, the city government initiated a communication program. First, Stickers featuring a picture of a statue of San Rafael—the name of the water reservoir—were distributed throughout the city, in order to make the need to conserve water at all times salient. Also, daily reports of the city’s water consumption were prominently published in the country’s major newspapers. Second, engaging campaigns were launched to teach individuals effective techniques for household water conservation. The mayor himself appeared in a TV ad taking a shower with his wife, suggesting taking showers in pairs. Third, the CEO of the water company personally awarded households with exceptional water savings a poster of San Rafael. These awards were made visible in the media. These strategies helped to create a social norm of water conservation. By the eighth week of the campaign, citywide water savings had significantly exceeded even the most optimistic technical predictions. Moreover, the reductions in water use persisted long after the tunnel was repaired and the emergency had been addressed.
Judo Policies?
Judo (in English “gentle way”), is a modern martial art created in Japan in 1882 by Jigoro Kano. Central to Kano’s vision for Judo was the principle of seiryoku zen'yō (maximum efficiency, minimum effort). In short, Kano claimed that resisting a more powerful opponent would result in defeat, whilst adjusting to and evading the opponent's attack would cause him to lose his balance, reduce his power, and allow his defeat. He was convinced that this principle was a route to self-improvement and the betterment of society in general. The recognition that people have cognitive and social bias, and that if we acknowledge these bias we can use them in their benefit, is allowing policy makers to revive the principle of seiryoku zen'yō. If governments adapt, instead of resisting, to individuals decision making bias, they can, trough small, low-cost, but powerful actions, enable people to make decisions and behave in ways that will lead to their longer term well-being. The WDR15 is a very important contribution to make that a reality not so far away from us in the future.
