World Development Report

Reframing decisions can improve welfare: The case of payday borrowing

a. The standard envelope, b. The envelope comparing the costs of the payday loan and credit card borrowing  See Figure »

What others think, expect, and do influences our preferences and decisions

Humans are inherently social. In making decisions, we are often affected by what others are thinking and doing and what they expect from us. Others can pull us toward certain frames and patterns of collective behavior.  See Illustration »

In experimental situations, most people behave as conditional cooperators rather than free riders

The standard economic model (panel a) assumes that people free ride. Actual experimental data (panel b) show that across eight societies, the majority of individuals behave as conditional cooperators rather than free riders when playing a public goods game. The model of free riding was not supported in any society studied.  See Figure »

Thinking draws on mental models

Individuals do not respond to objective experience but to mental representations of experience. In constructing their mental representations, people use interpretive frames provided by mental models. People have access to multiple and often conflicting mental models. Using a different mental model can change what an individual perceives and how he or she interprets it.  See Illustration »

Cuing a stigmatized or entitled identity can affect students’ performance

High-caste and low-caste boys from villages in India were randomly assigned to groups that varied the salience of caste identity. When their caste was not revealed, high-caste and low-caste boys were statistically indistinguishable in solving mazes. Revealing caste in mixed classrooms decreased the performance of low-caste boys. But publicly revealing caste in caste-segregated classrooms—a marker of high-caste entitlement—depressed the performance of both high-caste and low-caste boys, and again their performance was statistically indistinguishable.  See Figure »

There is greater variation across countries in cognitive caregiving than in socioemotional caregiving

Cognitive caregiving activities, shown by the dark bars, tend to be much greater in countries with high Human Development Indexes (HDI) than in countries with low HDI, although there are only slight differences in socioemotional activities (light bars) across countries. The height of the bars with babies on them indicates the average number of cognitive caregiving activities reported by parents in low- and high-HDI countries.  See Figure »

Clarifying a form can help borrowers find a better loan product

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, only 39 percent of the people could identify the cheapest credit product. When using the more straightforward summary sheet, 68 percent could identify the cheapest credit.  See Illustration »

Understanding behavior and identifying effective interventions are complex and iterative processes

In an approach that incorporates the psychological and social aspects of decision making, the intervention cycle looks different. The resources devoted to definition and diagnosis, as well as to design, are greater. The implementation period tests several interventions, each based on different assumptions about choice and behavior. One of the interventions is adapted and fed into a new round of definition, diagnosis, design, implementation, and testing. The process of refinement continues after the intervention is scaled up.  See Illustration »

Stickers placed in Kenyan minibuses reduced traffic accidents

English translation of bottom sticker: Hey, will you complain after he causes an accident? Be Awake. Be Steady. Speak Up!  See Illustration »

Targeting on the basis of bandwidth may help people make better decisions

Bandwidth may be especially low at certain times, such as periods of higher expenditures during festivals, or when a mother is about to give birth. Key decisions, such as whether to enroll a child in school or whether to go to the hospital for a baby’s birth, would ideally be moved out of these periods. Some decisions, such as choosing a health insurance plan or applying to a university, may require high levels of bandwidth no matter when they fall. Policies that make these decisions easier could be targeted at the time of decision making.  See Illustratioin »

How World Bank staff view traveling for a discount on a watch

How people in Jakarta, Indonesia, view traveling for a discount on a cell phone

Not noticing a decision can hurt productivity

Seaweed farming entails many decisions (examples are presented in 1 through 9). Even experienced seaweed farmers in Indonesia overlooked a crucial factor in the growth of their crop—the length of the pods—until researchers presented the missing information in a highly salient and individualized way.   See Illustration »

Take-up of health products drops precipitously in response to very small fees

Policies often set the prices of preventive health care products low to promote access while also providing a revenue stream to providers. But if access is important, it makes sense to bring the price all the way down to zero. A series of evaluations finds that even small price increases above zero lead to large drops in the number of people who choose to buy health products.   See Figure »

Worldviews can affect perceptions of the risk posed by climate change

While the Scientific Communication Thesis (panel a) predicts that perceptions of climate change risks increase as scientific literacy and numeracy improve, in actuality risk perceptions remain unchanged or even decline (panel b), especially for people with particular cultural worldviews. Individualism refers to a belief that government should avoid affecting individual choice; communitarianism is its opposite. Egalitarianism refers to support for equality and nondiscrimination; hierarchy is the opposite.  See Figure »

How development professionals interpreted data subjectively

Identical sets of data were presented to World Bank staff, but in different frames. In one frame, staff were asked which of two skin creams was more effective in reducing a rash. In the other, they were asked whether or not minimum wage laws reduce poverty. Even though the data were identical, World Bank respondents were significantly less accurate when considering the data for minimum wage laws than for skin cream. Views on whether minimum wage laws lower poverty tend to be related to cultural and political outlooks. Respondents supporting income equality were significantly less accurate when the data presented conflicted with their outlooks (and showed that minimum wage laws raise poverty rates) than they were when the data corresponded to their outlooks (and showed that minimum wage laws lower poverty rates).  See Figure »