Showing posts with label behavioral economics. Show all posts
Showing posts with label behavioral economics. Show all posts

Monday, June 01, 2015

Behavioural Insights in International Development

This is a guest post by Tom Wein.

International development seems a natural home for behavioural science, but how much progress has been made in integrating the two? Which challenges have been solved, and which remain?

The World Bank’s much-discussed ‘Mind, Society and Behaviour’ report is almost six months old, and co-author Varun Gauri came to the RSA to discuss progress so far. (You can watch the event video here). The integration project is, he argued, proceeding apace, and up to a point he is right. This post, sparked by Gauri’s talk but supplemented by further research and conversations, summarises the work done so far in creating behavioural science structures and alliances in development, before offering a personal view of the problems we still face in putting the two disciplines to work.

In terms of structures, the World Bank has so far been working with the Behavioral Insights Team, but will soon launch its own Behavioral Innovations Lab. There are also plans for staff training courses, and Gauri expressed his hope that behavioural science workshops would be integrated into the planning stage of all new World Bank projects.

Though Gauri talked mainly about the Bank, other donor organisations have made moves in similar directions, even if none have gone quite as far. DFID’s Chief Economist Stefan Dercon has been part of some interesting work at the intersection between development economics and psychology, though the wider organization has so far held back in this field. In 2013, USAID co-sponsored with UNICEF a summit on the evidence for behaviour change; the Agency has also funded a number of behavioural science-inflected change programmes.

Now outside government, the Behavioural Insights Team – the original ‘nudge unit’ – has also launched projects with UNDP, and with the governments of Mexico, Costa Rica, Guatemala and Peru. MIT’s Abdul Latif Jameel Poverty Action Lab, the Busara Center for Behavioral Economics in Nairobi, Cameroon’s IRESCO, and the Innovations for Poverty Action research programme have all sought to draw on psychology to explain behaviour and improve policy in developing countries. More directly employing behavioural science in development projects, rather than merely advising, is the NGO Evidence Action. At the biggest non-governmental donor of them all, Melinda Gates has spoken of her personal enthusiasm for behavioural science, and the foundation has funded Grand Challenges on changing health behaviours. There are ambitions to apply psychology to improve child nutrition, and to boost sanitation. For those trying to learn more, UCL’s Centre for Behaviour Change and Harvard Business School both offer training on the intersection between behavioural science, development and health.

So, in my opinion, there is some good work going on, and a mounting number of behavioural science studies have been conducted in developing countries (many of their results were mentioned by Gauri in his talk). It helps of course that development bodies have already acquired the habit, over the past decade, of conducting empirical research and reasonably rigorous evaluation; in that regard development policymaking was already more advanced than much domestic, national decision-making.

Though Gauri and others are right to be positive about the movement so far, some important challenges remain. Most significantly, the replication of some findings has not abolished the problem of applying WEIRD results to very different contexts; groups differ widely, and cross-cultural perspectives are still vital. Though knowledge of the particularities of conducting research in resource-constrained environments is spreading, we still lack a full understanding of the adjustments necessary and their implications for interpreting results. There is also, of course, much we still simply don’t know. As Gauri cautions, this is a discipline of incremental advances and diligent empiricism, not grand explanatory theories.

There has been one notable absence from the talk, and from the wider debate. Behavioral science’s temptation towards ‘we know best’ manipulation has been queried in virtually every context in which it has been applied. Yet not, Gauri said, at the World Bank. Skeptics would note that development economics has faced very similar criticisms, often accused of sidelining local voices in favour of intellectually arrogant technocracy. Given that development often deals – by definition – with the marginalized and disempowered, there is an even stronger duty than elsewhere to ensure that behavioural science interventions are implemented with the consent and cooperation of the participants.

Finally, what can behavioural science do to ensure that it is fit for purpose in developing countries? I believe its standard bearers can better engage with existing debates about behaviour in development, including the use of Theories of Change and efforts to leverage the power of communities. As a discipline, it can emphasize parsimony, both in its research questionnaires and in its models. For the latter work, the UCL team’s Behaviour Change Wheel deserves particular acclaim; 'Capabilities, Opportunities and Motivations' is accessible enough to be jotted down on the back of an envelope – even in an ancient Toyota on awful dirt roads. Behavioural scientists must recognise that development professionals have long been trying to change behaviour, and that behavioural science is there to improve and supplement, not replace. Above all, they can continue to ensure that behavioural science remains a discipline that seeks not just to understand but to respond; methods and models must have the clearest possible link from data to specific, actionable recommendations, because development does not need more vague advice from learned thinkers.

Development is ill-defined and contested; some would do away with the concept altogether. Behavioural science has experienced some of the same tribulations. The marriage between these two mongrel disciplines will only work if it focuses on ‘what works’, and is relentlessly pragmatic in delivering results.


Tom Wein is the founding partner of Aware International, a social enterprise offering behaviour insight and ground insight services for the public good. A behavioural science consultant and writer, he works mostly on conflict and development. He tweets @tom_wein and his writing is collected at tomwein.tumblr.com.


Saturday, March 15, 2014

Using behavioural science in the classroom to unlock motivation

Everyone starts with an A

Applying behavioural insight to improve performance and narrow the socioeconomic attainment gap in education.

“Imagine a classroom where everyone started off an academic year with an “A” grade, and in order to keep the grade, a pupil had to show continuous improvement throughout the year. In this classroom, the teacher would have to dock points from a pupil’s assessment when his or her performance or achievement was inadequate, and pupils would work to maintain their high mark rather than to work up to it. How would this affect effort, expectations, performance, and assessment relative to current practice?”

This is one of the questions the RSA (Royal Society for the encouragement of Arts Manufacture and Commerce) pose in their report
 Everyone Starts with an A, which explores the application of behavioural insight to educational policy and practice.

Using research from behavioural science and our evolving understanding of human nature, the report explores how effort, motivation, learning enjoyment, resilience, and overall performance at school can be influenced in ways not often traditionally recognised.

Download EveryoneStarts with an 'A' full report in English (PDF 393.6KB)
Download Everyone Starts with an 'A' poster in English (PDF 71.4KB)
Download Everyone Starts with an 'A' full report in German (PDF 411.4KB)
Download Everyone Starts with an 'A' poster in German (PDF 56.3KB)

Connecting theory to practice

Supported by the Vodafone Foundation Germany, this report is intended to start a conversation among educators and includes practical tips to help connect theory to real-life practice in the classroom.

Three concept areas are covered:
·         Growth mindsets: the belief that intelligence and ability are not a fixed and innate trait, but rather they can be improved and strengthened through effort and practice.
·         Cognitive biases: our thinking patterns can have systematic influence on motivation, evaluation, and teacher and pupil expectations about performance. Anchoring, the halo effect, confirmation bias, and loss aversion may all play a role. 
·         Surroundings: the physical environment of the classroom can affect various cognitive and non-cognitive skills - such as attention levels and self-control - which are important for learning.

These three points are promising areas for further research. An improved understanding of how these concepts affect pupil learning might be especially valuable to disrupt patterns of assumption about performance levels, for those who self-identify as being part of a stigmatised group, such as those from a low socioeconomic background. The RSA hopes that practitioners will continue the discussion started here by trialling the tips and techniques in their own schools and sharing their experiences with peers and colleagues.

For more information, download the paper here (or choose your preferred version above), read blogs about the launch of the report here and here, or view the press release here


Nathalie Spencer is a Senior Researcher in the RSA’s Social Brain Centre, and a longtime reader of the Stirling Behavioural Science blog.  

Thursday, May 17, 2012

Behavioural Economics and the Facebook IPO

Facebook, the social network, has raised $16bn in an initial public offering that values the company at $104bn, meaning it is now among the 25 most valuable public groups in the United States. This recent article by John Wasik (Reuters Money) discusses whether or not it is a good idea to get a piece of the action. Daniel Kahneman declined to comment specifically on Facebook, but raised the importance of a number of behavioural biases: overconfidence, optimism-bias and anchoring; to name a few. Liam has blogged before on behavioural finance, and I flagged the work of James Montier in a comment on that post. Avanidhar Subrahmanyam's review of the behavioural finance literature is available here, free-to-access.

Sunday, October 23, 2011

Drive: The surprising truth about what motivates us

The Royal Society of Arts has published an amazing set of animation videos by Andrew Park (on Youtube and elsewhere) about a whole range of intellectually challenging and complex ideas and one of them has some surprising ideas about motivation and the role of incentives that should be of interest to anyone working on behavioural economics. The Guardian gives the background to these videos here.



Friday, September 23, 2011

Energy Switching: why the consumer inertia?

Inertia is a major feature of the policy literature in behavioural economics. The BBC cover this area in relation to energy consumers. (via @davdittrich on twitter)

We're more likely to get divorced than move bank accounts. Four-fifths of people cannot be bothered to look for cheaper gas or electric bills despite the urging of numerous consumer gurus to switch.

In short we'd rather pay hundreds of pounds a year extra on phone, broadband and utility bills rather than have to enter the mind-numbing world of the price comparison websites.

Friday, December 24, 2010

Behavio(u)ral Economics: What's in a Name?

"What's in a name? That which we call a rose
By any other name would smell as sweet.
"

The above quotation from Shakespeare's Romeo and Juliet is considered by some to indicate Juliet's concern that a name is an artificial and meaningless convention; it is what the name respresents that really matters. Readers of this blog are probably familiar with the distinction between the spelling of behavioural economics in Europe, and behavioral economics in the United States. Previously I wondered whether this distinction really mattered; and now, to some extent, I know.

The source of my knowledge is http://www.culturomics.org/, a website which sifts through the hundreds of billions of words digitised as part of Google Books' effort to create a universal online library. Culturomics was reviewed this week in The Economist:
Anyone can now go to www.culturomics.org, type in a word or expression in one of seven languages (English, French, German, Spanish, Hebrew, Russian, Chinese) and see for himself. Jean-Baptiste Michel, a postdoctoral researcher at Harvard University and the lead author of a related study just published in Science (Quantitative Analysis of Culture Using Millions of Digitized Books)... (says) that twiddling with this new virtual widget is "addictive".
Putting the phrases "behavioural economics", "economic psychology" and "behavioral economics" into Culturomics produces the chart shown below (click on the image to see a bigger version). It can be seen that behavioral (the green line) has always been more popular than behavioural (the blue line). This provides some reason to believe that the American spelling of the discipline's name is quite important. Furthermore, this exercise underscores the importance of choosing key-phrases (or key-words) carefully, as discussed on this blog before here. Finally, it can also be seen that the phrase behavioral economics has overtaken economic psychology in popularity since the year 1998.


Addendum: Of course, it is also worth pointing out that some scholars view the phrase economic psychology to mean the psychological study of issues in the economic domain; and the phrase behavio(u)ral economics to mean the incorporation of psychological insight into economic theory. This is worth considering when interpreting the chart above.

Thursday, December 16, 2010

Tesco Metrics: Every Little Bit of Data Helps

Liam linked to an article in the Guardian earlier this week, which was all about Nudge. One comment in the article was that "while shopping, working, or even deciding on who to share their lives with, individuals are less thoughtful and less calculating than modern-day economists... typically assume." This blog-post zones in on shopping, in particular the data-analysis of consumer purchasing behaviour at Tesco. The Guardian article linked above also suggests that "any critic who points out that that's hardly news to the women...(and) the men at Tesco... is spot on." Indeed, Tesco have been conducting interesting micro-level analysis on individual behaviour for many years now.

An informative article on this topic was written by Jenny Davies in the Sunday Times last year. According to Davies, Tesco gets its data from its loyalty clubcard scheme; this was launched 15 years ago with much fanfare - the advert below may jog memories for some readers. Davies also informs us that around this time last year, Tesco was tracking "the shopping habits of 16 million families across Britain, delivering an extraordinary insight into their lives — not only for itself but for companies such as Coca-Cola, Nestlé and Unilever, which buy the rights to the data." Readers in the Republic of Ireland might also remember that the Tesco Clubcard was launched there on the 13th. Oct 1997. To date almost 800,000 members have joined in the Republic.



Jenny Davies also tells us that: "Each bill detailing every item in a customer’s shopping basket is logged in a data centre in London Docklands and decoded by Dunnhumby, the marketing firm that is in charge of the scheme. It has to process 100 baskets a second — six million transactions a day. This helps Tesco to decide which products should go on to the shelves at what times, and in early trials it increased sales by as much as 12% in some of the supermarkets." According to the Guardian (in this article), the power of the clubcard was demonstrated in 2009, "when Tesco harnessed the card's database to halt the exodus of shoppers to cheaper retailers because (of) the recession, by doubling the points available to shoppers."

In a blog-post on Tesco data from two years ago, Tony Hirst desribes the early analysis conducted by Dunnhumby, and how this has changed over the last 15 years. A couple of months ago, Dunnhumby (and its recently departed co-founders) were profiled in the Guardian. The article says:
According to company lore, there was a 30-second silence after Humby presented the initial trial's results to the Tesco board, until the then chairman, Lord MacLaurin, declared: "What scares me is that you know more about my customers after three months than I know after 30 years."
One question that readers might have is: what's in it for club-card holders? According to Tony Hirst, a good place to get an answer to this question is the book: Scoring Points: How Tesco Continues to Win Customer Loyalty. Hirst describes the "Clubcard customer contract: more data means better segmentation, means more targeted/personalised services, means better profiling. In short, the more you shop with us, the more benefit you will accrue." According to the Marketing Week magazine, "from the day of its launch in February 1995 the Tesco Clubcard was immediately embraced by customers attracted to the 1% discount off their shopping bills. But its long term success has not been built on discounts alone, rather on the personalisation of the shopping experience."

However, perhaps the last word should go to UCD social psychologist Ken McKenzie, writing on his A Head in Business Blog: "I don’t have a loyalty card, and every time I’m in Boots, Tesco or Dunnes, and they ask if I have one, I feel a slight sense that I should justify why I don’t, as it it’s odd to not have one. And according to rational actor theory in Economics, it is odd to not have a loyalty card and avail of discounts. However, there’s a small but growing body of work in the overlapping area between Psychology and Economics that might explain why (some) people might behave like me."

Thursday, November 25, 2010

Behavioural Economics on RTE Radio 1

Earlier today, behavioural economics featured on the Pat Kenny show (there are some problems with this link) on RTE Radio 1. I don't think the podcast is available yet, but details about the show are available here. I happened to be listening earlier; the application of behavioural economics to consumer behaviour was the main theme. A talk by David Laibson from earlier this week in Brussels (who also spoke in UCD this week) was mentioned, as was a talk by Cass Sunstein.

Saturday, October 02, 2010

Behavioural Economics and Humanities

I had an interesting email from a student constructively criticising me for dismissing the value of studying English literature for understanding behavioural economics. The context is a class where some of the students have joint majors - the value of studying political science, law and philosophy for studying behavioural economics is very obvious and I spoke a bit about the overlap between behavioural economics and these fields. Some of the students have English as their other major and I waved this away without going into potential overlaps. As pointed out by the student to me afterwards, there may be a lot of crossovers that are worth thinking about. He himself pointed to the training that literature students receive in deconstructing arguments and, in particular, linking text back to wider systems of power and social control. The email stimulated me to think further about the crossover between behavioural economics and literature, and below are a few random connections.

- Jon Elster is one of the most widely cited and influential authors in behavioural economics. He is a philosopher and social scientist who, among other things, wrote the epic work on time discounting "Ulysses and the Sirens". Elster has often argued for greater linkage between social sciences and humanities. His works frequently draw from deep literary metaphors and he often uses social science theory as a hermeneutic tool to uncover the meaning of texts and paintings.

- The importance of narrative is increasingly being talked about in economics. In particular, George Akerlof has been arguing that narratives have a causal role in the maintenance of group economic inequality and business cycles. His recent book Identity Economics, co-authored with Rachel Kranton, outlines their ideas in this area.

- Deirdre McCloskey has argued for decades that economics is a rhethorical science, by which she means that economic persuasion relies as much on stories and arguments as it does on statistical evidence. As far as I am aware, nobody has yet attempted to deconstruct the type of metaphors and narratives arising from behavioural economics. As it becomes the mainstream, it will be interesting to see how this will happen. The dominant neoclassical account of human decision making led to the "homo economicus" metaphor and has been critiqued thousands of times. We can think of a few instances where the new less than perfect vision of people has been critiqued e.g. Gigerenzer famously argued that the heuristics and biases literature created a distorted and unfavourable account of human decision making. Rubinstein has viciously attacked what he perceives as the arbitrariness and frivolity of a lot of behavioural economics, particularly neuroeconomics.

- The student mentioned continental philosophers such as Foucalt and Derrida in his email. Continental philosophy tends not to get a great time on this blog (I can picture Kevin rubbing his hands and choosing his weapon as I type). In the comments, Rob has been arguing in various guises that policy applications of behavioural economics are Orwellian ideology in disguise. There is not much in economics textbooks to help us understand the connection between theory, empirics and power structures/ideology etc., Particularly when we get into thorny issues such as social justice and individual freedom then relying solely on statistical evidence hits sharp limits.

- A number of people have looked at how paradigms are formed in economics. Mark Blaug, in particular, stands out as someone who has grappled with big questions underlying the philosophy of science aspects of economics. His book "The Methodology of Economics" is long overdue a spin at our book club. The entry by Daniel Hausman in the Stanford Encyclopedia of Economics deals with many of the philosophical problems at the heart of economics.

- Heterodox Economics is an umbrella terms for a wide range of approaches to economics that exist mostly outside of mainstream Economics departments and journals. This is a very broad church incorporating Marxist and feminist economists, eco-economists and a wide range of other schools of thought. A student-led group developed a movement know as post-autistic economics that heavily criticise mathematical formalism in economics and the atomistic depiction of the individual decision maker. Their journal Real World Economics review publishes many articles that draw from postmodernism and related areas.

- In my own current work, I am struggling with how to integrate qualitative research methodologies into studying well-being and economic decision making. For example, we are currently drafting a paper based on focus group interviews with about 100 people who have been made redundant. There is so much information in these interviews that is interesting and valuable yet it is very difficult for someone trained mostly in econometric methods to capture what is happening and even more difficult to write it up in a way that other economists will care about.

So I guess all of the above areas are points of contact that students from a literature background will have strong insights into.

Wednesday, September 29, 2010

Links of Interest: 29th September

1. President Barack Obama chose Austan Goolsbee to succeed Christina Romer as the head of the U.S. Council of Economic Advisers. Here, the Wall Street Journal do a profile of Goolsbee.

2. The Guardian: a "nudge unit" set up by David Cameron in the Cabinet Office is working on how to use behavioural economics and market signals to persuade citizens to behave in a more socially integrated way.

3. The Daily Telegraph on Rory Sutherland's quiet behavioural economics revolution in the advertising industry.

4. Greatest Good: "a unique firm formed with the goal of applying rigorous, cutting-edge data analysis and economic methods to the most salient problems of business and philanthropy." Founding partners include Steven Levitt, Gary Becker, Daniel Kahneman and John List. Affiliates include David Laibson, Emily Oster, Steven Pinker and Richard Thaler.

5. The U.S. National Commission on Fiscal Responsibility and Reform. They have a separate mandate to the Congressional Budget Office. "The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run."

6. A fascinating read for any Ph.D. student in Economics, or Ph.D. economist: 'Market Structure in the Production of Economics Ph.D.s'. Frank A. Scott, Jr. and Jeffrey D. Anstine; Southern Economic Journal Vol. 64, No. 1 (Jul., 1997), pp. 307-320.

7. The (Irish) Department of Education and Skills Inventory of Data Sources: "This document contains a matrix of educational data sources which are available from the Department of Education and Science and the agencies under its aegis."

8. University Attendance Scanners: "Northern Arizona University has installed electronic devices that record student attendance in an effort to boost freshmen grades and lift lagging graduation rates. But some students say the monitoring makes them feel less independent." (Southern California Public Radio).

9. "The Production and Deployment of an On-line Video Learning Bank in a Skills Training Environment" - Gerald Cannon, Mary Kelly, Colette Lyng, Mary McGrath; AISHE-J: The All Ireland Journal of Teaching and Learning in Higher Education, Vol 1, No 1 (2009).

10. For economics undergraduates: the Irish Taxation Institute Fantasy Budget Competition. Who needs fantasy football?

Monday, July 26, 2010

Getting to the Top of Mind: How Reminders Increase Saving

New NBER working paper

Getting to the Top of Mind: How Reminders Increase Saving
by Dean Karlan, Margaret McConnell, Sendhil Mullainathan, Jonathan Zinman - #16205 (AG)

Abstract:

We develop and test a simple model of limited attention in
intertemporal choice. The model posits that individuals fully attend
to consumption in all periods but fail to attend to some future lumpy
expenditure opportunities. This asymmetry generates some predictions
that overlap with models of present-bias. Our model also generates
the unique predictions that reminders may increase saving, and that
reminders will be more effective when they increase the salience of a
specific expenditure. We find support for these predictions in three
field experiments that randomly assign reminders to new savings
account holders.

http://papers.nber.org/papers/W16205

Monday, July 19, 2010

Links: 19th July 2010

1. "Avoiding a Lost Generation: How to Minimize the Impact of the Great Recession on Young Workers": Testimony before Joint Economic Committee of the United States Congress on May 26th, 2010. By James Sherk: Senior Policy Analyst in Labor Economics at the The Heritage Foundation.

2. "The Kids Aren’t Alright — A Labor Market Analysis of Young Workers": Kathryn Anne Edwards and Alexander Hertel-Fernandez (Economic Policy Institute): EPI Briefing Paper #258, April 7, 2010.

3. The Browne Review (or the Independent Review of Higher Education Funding and Student Finance) is a panel which will consider the future direction of higher education funding in England. It was launched on the 9 November 2009 and is being chaired by Lord Browne of Madingley, the former chief executive of BP. Wikipedia provides additional information.

4. "Policy Watch: Income-Contingent College Loans": Alan B. Krueger and William G. Bowen, The Journal of Economic Perspectives, Vol. 7, No. 3 (Summer, 1993), pp. 193-201

5. ESRI Higher Education Policy Conference: "Higher Education Policy: Evidence from Ireland and Europe". Venue: The ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2. Date: 16/11/2010.

6. David Willetts MP, the UK universities minister: "If You Can't Get a Job, Start a Business", Guardian: 16th July 2010.

7. On a lighter note, one for Dr. Kev: "Irishmen prefer to be single, survey shows". "Lee-Ann Burke, a lecturer in economics at University College Cork , said the study contradicts other surveys showing men happier being married."

8. Google Offers OCR: when you import files into Google Docs (JPEG, GIF, PNG, or PDF) you have the option of running optical character recognition on them.

9. The Turbulence Ahead blog got a makeover.

10. Finally, here's a video of Pete Lunn (ESRI) speaking at the Irish Economics and Psychology event last November, on "A Computational Theory of Exchange". Thanks to Karl Deeter for organising the video; if you follow this link, you will see other talks from the event by Marcel Das, Stephen Kinsella and Jonathan Murphy.

Monday, June 14, 2010

Evidence on the goodness of economists

Does economics make you a nicer, better person? I know what you are thinking and I am inclined to agree but there is nothing like some good evidence. This paper looks at the association between economics study and pro-social behaviour including voter turnout and volunteering.

Is economics coursework, or majoring in economics, associated with different civic behaviors?
S Allgood, W Bosshardt,W an der Klaauw,M Watts
Studies regularly link levels of educational attainment to civic behavior and attitudes, but only a few investigate the role played by specific coursework. Using data collected from students who attended one of four public universities in our study, we investigate the relationship between economics coursework and civic behavior after graduation. Drawing from large samples of students in economics, business, or general majors, we compare responses across the three groups and by the number of undergraduate economics courses completed. We find that undergraduate coursework in economics is strongly associated with political party affiliation and with donations to candidates or parties, but not with the decision to vote or not vote. Nor is studying economics correlated with the likelihood (or intensity of) volunteerism.
http://d.repec.org/n?u=RePEc:fip:fednsr:450&r=edu

Monday, May 10, 2010

Iyengar - The Art of Choosing. Not A Review

Sheena Iyengar's book "The Art of Choosing " is well worth a read for anyone interested in behavioural economics, decision making and related areas. Iyengar is a Columbia Professor who works on choice theory. The book is in a similar vein of other recent books such as Predictably Irrational and Nudge that bring research in this area to a massive audience. The opening chapters discuss her very interesting life story, being a blind daughter of Indian Sikh migrants to Canada. The level of personal disclosure paints some poignant pictures without being overly intimate. In general, the discussion operates on a more intense level than similar books, while still describing many interesting experiments conducted by herself and more generally. In particular, there is more emphasis on the relation of choice to identity, culture, survival than in more economic policy orientated treatments.

A short video about the book is linked here