The World Development Report (WDR) of 2015 is titled “Mind Society and Behavior”.  This report discusses the idea that by paying close attention on how history, social identities, worldviews and social norms shape our thinking; policymakers can design and implement better policies and interventions that target human choice and action. This article will summarize principals of human thinking and examples of cost effective policies from the report. The report discusses three main principles of thinking.

Thinking automatically:

When thinking automatically, humans are influenced by what comes to their mind automatically. This type of thinking is effortless. This has narrow frame of view without any reasoning and reflection.

Thinking Socially:

When thinking socially, humans are influenced by social identities, social networks and social norms. People care about what those around them are doing and how they fit into their groups and this influences their behaviors and decisions.

Thinking with mental models:

When people think they do not use concepts they themselves invented. Instead they use concepts, identities, and world views drawn from their communities. Mental models affect what individuals perceive and how they interpret what they perceive.

This knowledge of how people think and behave can be applied to formulate cost effective policies. Here are some examples of cost effective policies and interventions in an experiment settings with treatment and control groups.

Household Finance

High consumer debt results from thinking automatically, where individuals attach much more weight to current consumption through borrowing than to the loss of consumption that will occur when they have to pay back a loan in the future with interest.

In one experiment, low-income subjects from Mexico City were invited to classrooms to choose the cheapest one-year, $800 (10,000 peso) loan product from a set of five products, representative of actual credit products offered by banks in Mexico City. They could earn rewards by getting the right answer. When using the banks’ descriptions of their products through bank’s brochure, only 39 percent of the people could identify the cheapest credit product. When using more straightforward and user friendly summary sheet designed by the Consumer Financial Credit Bureau of Mexico, 68 percent could identify the cheapest credit. Small change in how information conveyed helped people to identify and choose cheapest credit. How information is presented can over-ride thinking automatically and help people make better decisions.

World Bank Staffs

Development professionals and policy makers themselves are subject to biases and mistakes that arise from thinking automatically, thinking socially and thinking with mental models.

Team of The World Development Report (WDR) 2015 administered a randomized survey to examine judgment and decision making among World Bank staff. Although 42 percent of Bank staff predicted that most poor people in Nairobi, Kenya, would agree with the statement that “vaccines are risky because they can cause sterilization,” only 11 percent of the poor people sampled (defined in this case as the bottom third of the wealth distribution in that city) actually agreed with the statement. Similarly, staff predicted that many more poor residents of Jakarta (Indonesia), and Lima (Peru), would express feelings of helplessness and lack of control over their future than the actual number of residents expressing those feelings, according to the WDR 2015 team survey.

This finding suggests that development professionals may assume that poor individuals may be less autonomous, less responsible, less hopeful, and less knowledgeable than they in fact are. It is important for policy makers to check their mental models of poverty against reality before forming policies related to poverty issues.

Unsafe Driving in Kenya

People are aware of the danger of travelling in the minibus in Kenya. One-third of respondents to a passenger survey conducted before an intervention program reported having felt that their life was in danger on a recent trip. Researchers tried one inexpensive behavior modification program to reduce accidents in minibuses. Buses were randomly divided into two groups. In one group, nothing was done. In the other group, passengers were reminded of their right to a safe ride on public transportation. Stickers posted in the buses encouraged passengers to “heckle and chide” reckless drivers. The English translation of sticker is: ‘Don’t just sit there as he drives dangerously. STAND UP. SPEAK UP. NOW!’. The intervention was a remarkable success. Insurance claims involving injury or death fell by half, from 10 percent to 5 percent of claims. This policy tapped into the social thinking to change the behavior of reckless driver.

Corruption in India

Where corruption is common, acting corruptly may become automatic thinking for officials. If so, an appropriate countermeasure might be to create situations to get them to think deliberatively about their behavior and reassess their attitudes and mental models about public service. When a nongovernmental organization (NGO) called 5th Pillar created a zero-rupee note in India with the inscription “I promise to neither accept nor give  a bribe” for people to hand out when asked for bribes. One official was so stunned to receive the note that he handed back all the bribes he had solicited for providing electricity to a village. Another stood up, offered tea to the woman from whom he was trying to extort money, and approved a loan so her granddaughter could go to college.

Examples of such intervention and policies that is cost effective has great potential in Nepal especially the policy dealing with corruption and unsafe driving.

Dhruba Bhandari is a Research Fellow at Samriddhi, The Prosperity Foundation.

Photo source: Leeds