(. Researcher-led interventions have also had sizable health impacts; Erez Yoeli and his colleagues (including Syon Bhanot, a co-author of this piece), for example, found that a simple behaviorally-informed text message platform designed to encourage tuberculosis (TB) medication adherence in Kenya was able to reduce failure rates for TB treatment from 13.1 percent to 4.2 percent. If the last decade has taught us anything, there is a growing vanguard of researchers willing to break the academic mold and apply themselves to help the world’s poorest populations. The dominant view in development economics up to about the 1990s is that the poor are “poor but efficient” (Schultz, 1964) This view started to change during the past two decades. While many of the early, pioneering studies took place in sanitized “lab” environments, with subjects from Western countries, the past decade has seen an explosion of behavioral science research in the messier environment of the developing world. Handbook of Behavioral Economics: Applications and Foundations 1, https://doi.org/10.1016/bs.hesbe.2018.12.002. Examples like this demonstrate that behavioral economics has the potential to revolutionize development policy. So less rain means more stress, which means a worse quality of life. However, for many people around the world, behavioral biases and irrationalities can have more pernicious effects on well-being. Aishwarya Deshpande is a student in the Master of Brain and Cognition program at Universitat Pompeu Fabra (UPF). Lichand G. & Mani, A. It seems that psychological traps of poverty are formed from years of living in extreme stress and suffering from mental taxation, and the issues that come with both, including poor nutrition, vulnerability to addictions, and myopic decision-making. Months later, they suffer when their farm yields are much smaller than they could be. Karlan, D., McConnell, M., Mullainathan, S., & Zinman, J. Grabbing coffee. We next consider various topics in development, including preventive health, savings, insurance, technology adoption, labor markets, and firms. Future Development. For example, Coren Apicella and her colleagues studied the endowment effect (our tendency to raise our valuation of goods once we own them) with Hadza bushmen, one of the last hunter-gatherer populations of the world. These efforts can help policymakers better understand how to best assist those living in poverty in the poorest places on earth. Indeed, Anandi Mani and her colleagues found that the cognitive capabilities of farmers are dependent on the harvest cycle—farmers show diminished cognitive capabilities before harvest (when poor) as compared to after harvest (when rich). Early April? PAD is a non-profit organization and Kremer receives no financial compensation from PAD. Copyright © 2019 Elsevier B.V. All rights reserved. If You’re Up for It, Here’s How to Start, Dispatches from the Behavioral Scientists Fighting Coronavirus in the Global South, Daydreaming Might Make You More Creative—But It Depends on What You Daydream About, Research Lead: Commute Nostalgia, Lessons from NASA, Nobel Winners, Crusaders, Cooperators and the Complicit, and More. Behavioral Development Lab (BDL) - Pioneered by three young researchers—Prof. He devised a commitment device that provided a high-return savings opportunity and incentives for sobriety. Behavioral economics is often studied in the contexts of consumer behavior—overeating, going to the gym, doing your homework, and other relatively “first world” problems. Working Paper. Similarly, Frank Schilbach conducted a study with poor cycle-rickshaw drivers in Chennai, India, finding that they struggled to control their consumption of alcohol. Researchers in the field of development economics have begun to introduce concepts of behavioral economics into their studies to yield new information regarding the nature of wealth, income and poverty in emerging markets. Heather Schofield, Prof. Frank Schilbach, and Prof. Gautam Rao—the Behavioral Development Lab focuses on integrating behavioral economics and development economics to … We use cookies to help provide and enhance our service and tailor content and ads. New research suggests a critical role for environmental factors as well. They found that the Hadza living in areas with greater exposure to modern society display the endowment effect, whereas the ones who live in isolated regions do not. The second category of research involves the actual design and testing of behavioral interventions meant to improve the lives of the very poor. Behavioral science has come a long way in the past 50 years. Audiences at the NBER Development Economics workshop, SITE and ESA conference provided helpful comments on early versions of this chapter. “Cognitive Droughts”. For example, Josh Dean and a team of researchers used a lab-in-the-field experiment in Kenya to study the effects of ambient noise (ubiquitous in the developing world) on productivity. Hear how these two fields are working together to better understand household behavior and improve economic outcomes in developing countries. Furthermore, as automation gradually reaches the developing world, social welfare programs need to be adapted to the changing times, as more and more people may face reduced opportunities for work. His areas of research include pro-social behavior, environmental conservation, development, and personal finance decisions. This article is part of our special issue “Nudge Turns 10,” which explores the intersection of behavioral science and public policy. In other words, this is the exact kind of behavior we humans are hardwired to put off until the last possible moment (think about your taxes—when do you usually do those? Behavioral design: a new approach to development policy. (2016). The researchers tested this solution and found that free delivery of fertilizer had minimal impact when it was offered at the “wrong” time (growing season, when money was scarce) but had huge impacts when it was offered at the “right” time (just after the harvest, when farmers had some cash). It will be exciting to see what progress is made in this field in coming years. Specifically, the authors studied the cortisol levels (a biological measure of stress) of farmers in Kenya and found that low levels of rain in the preceding year caused farmers to become a lot more stressed. Taken together, this recent work has given us an understanding of another way in which poverty in the developing world impedes the ability to escape it. Research on the potential of new approaches for supporting growing populations during the rise of automation, such as universal basic income or public works programs, is vital for our understanding of globalization and how we can build social systems that are resilient to its effects. This work has given us greater insight into how and why the world’s poorest populations make the decisions they do. One little, logical, well-timed “nudge” was all that was needed to help farmers make a better decision. The seemingly trivial change of posting a sticker transformed the behavior of the drivers. They are also vital in the so-called “developed” world, where these issues are often just as acute. Specifically, they created a bank account that restricted access to deposits (without interest), and found that such accounts are surprisingly popular (despite the fact that there is no rational reason to want them).