Category: Behavioral Economics

Why positive thinking won鈥檛 get you out of poverty

Farwa Sial11 Comments

attitude-be-positive-draw-262532.jpgBy Farwa Sial and Carolina Alves

In a recent听, the development economist Seema Jayachandran discusses three studies that used听Randomised Controlled Trials (or RCTs) to understand听the benefits of enhancing the self-worth of poor people. Despite wide differences in context, all the cases explore the viability of 鈥榤odest interventions鈥� to 鈥榠nstill hope鈥� in marginalised communities, concluding that 鈥榬emarkable improvements鈥� in the quest for poverty reduction are possible.

听from Uganda, for example, argues that 鈥渁 role model can have significant effects on students鈥� educational attainment,鈥� so the suggestion for policy-makers might be 鈥渢o place more emphasis on motivation and inspiration through example.鈥�听Another听听argues that 鈥減sychological barriers impede such disadvantaged groups from breaking the vicious circle and achieving better outcomes in life,鈥� so small but effective changes that address these psychological constraints can alleviate the effects of poverty and social exclusion.

The underlying theme of these studies is that individuals can surmount the structural challenges of poverty through their own efforts using tools like 鈥榚ffective role models,鈥� the generation of 鈥榤ore hope,鈥� and the 鈥榠mprovement of their mental health.鈥� Positive psychology of this kind and an emphasis on behavior change to meet the goals of individuals have been around at least since the 1950s, first in the popular literature of self-help books and now in academia, where they form part of an increasingly fashionable trend to 鈥榙o poverty reduction differently.鈥�Read More »

Think Positive, Climb out of Poverty? It鈥檚 Just Not So Easy!

Svenja Flechtner4 Comments
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Social mobility in Brazil: Positive thinking and ambitious aspirations can create lots of frictions鈥�

A few weeks ago, from Northwestern University published an in which she discussed the role of positive thinking and of believing in oneself for overcoming poverty. Jayachandran argues that there is “growing evidence that it can used as an anti-poverty strategy”, while also warning about placing too much emphasis on positive thinking alone. This post will dwell on the latter point, arguing that we should pay much more attention to limitations and broader contexts of positive thinking in development. I do not want to deny the role of self-worth and forward-looking aspirations for poverty reduction and quality of life more generally, but I will emphasize the importance of considering their role only as part of a broader policy mix.

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Poor Behavior, Good Behavioral Policies? Double Standards for the North and South

Svenja Flechtner2 Comments

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Behavioral approaches to development economics and policy have gained momentum in recent years. A growing number of papers studying behavior of people in poor countries have been published in top journals, accompanied by the rise of randomized controlled trials (RCTs). In 2015, the was dedicated to behavioral and cognitive research and policy. Papers studying how to or have become classics in the field. Lots of hope has been placed into social experiments and behavioral policies .

Behavioral policies are of course not reserved for policy-making in poor countries. In fact, nudges became famous with a . Many behavioral instruments have been discussed and tested in and for rich countries. But there has been an important difference as compared to the debates in development economics: when debating behavioral policies in rich countries, scholars have also devoted lots of time to consider normative and ethical concerns. For example, following Thaler and Sunstein鈥檚 exposition of (see also ), a debate unfolded on whether nudges could be anti-libertarian (, , , or ). Implications of the use of nudges as a new form of government policy have been analyzed, for example, from a , or with a focus on . have been written about . The debate has reached a great level of differentiation, e.g. when authors argue that so-called (these are nudges that seek to stimulate voluntary cooperation in social dilemma situations) may be justified for different reasons than those targeting individual welfare. Overall, the debate has become really sophisticated, and the autonomy, welfare, and dignity of citizens in rich countries as well as consequences of the use of behavioral policies for these countries鈥� modes of government have received lots of careful scrutiny (recently again ).Read More »