Better late than never! After recognising policy failures of the past, the World Bank has finally lent its ears to what behavioural economists have long been arguing: human beings are not rational or egoistic; nor are they more or less identical. The central point of the bank’s World Development Report 2015 revolves around the notion that “policy design that takes into account psychological and cultural factors will achieve development goals faster.”
The report has not been launched as yet. But bloggers from global developmental community who have received advanced copies of the report, write that its main message is that “every policy rests on explicit or implicit assumptions about how people make choices, and that those assumptions are incorrect more often than we believe. It demonstrates that new policy ideas based on a richer view of decision-making can yield high returns in fields such as addressing poverty, finance, productivity, health, children, and climate change.”
Adopting this in developing countries like Pakistan that are busy playing catch-up in global intellectual discourse, this new developmental paradigm will effectively require a change of mindset. Considering that behavioural economics has still not gained currency as has archetypal macroeconomics, the change in mindset will be a tall task, at home and abroad.
However, if influencing behaviour is the main goal of public policy, then the need to understand context and a more complex set of human motivations before designing policy is indeed paramount. For developing economies like Pakistan, where ‘homo-economicus’ still hasn’t come to dominate the entire land, and where big pockets of ‘traditional man’ still exist in large numbers, the implications of this change in thinking could be two folds.
First, there is a need to start hiring non-economists, such as psychologists and decision sciences experts, in the government as well as in the third sector. Only then would we be able to capitalise on the previously unrecognized cognitive and social processes for effective development policy making, and indeed for influencing public behaviour in conventional macroeconomic affairs such as tax collection, energy conservation. The same techniques can also be used in fostering the democratic values, moderation and tolerance.
Second, and on a related note, Pakistani universities ought to start developing research clusters around these emerging fields and also start offering these disciplines as majors than as one-off token courses. The launch of the report may mark the biggest turnaround in global developmental thinking since the days when the UNDP adopted the human development approach as envisaged by Pakistan’s very own Mahbub-ul-Haq and the Nobel laureate Amartya Sen in the 90s.
The human development approach took off only when the UNDP owned it and ran with it; the growth in intellectual community followed later. With the World Bank now supporting behavioural economics, the discipline can be expected to start getting the attention it deserved a long time ago. Hopefully, Pakistani academia is well prepared for that.
