Exploring the Second Strand of Behavioral Economics
February 22, 2016The Science of Delivery

In traditional economics, the rational actor is cast as the decision-maker. Early work in behavioral economics introduced the concept of the quasi-rational actor (whose preferences can be reversed by seemingly irrelevant factors). But more recent work in behavioral economics goes a step further: the enculturated actor is the decision-maker. He or she has endogenous perception, cognition, and preferences. They are shaped by sociocultural factors in durable ways.

In this presentation, Karla Hoff will attempt to broaden economic discourse by importing insights into human behavior from not only psychology but also sociology and anthropology. She will show that perception and cognition, which were until recently thought to be “basic, universal, and natural to human functioning,” vary dramatically among cultural groups (Markus and Kitayama 2010). This more realistic model of human behavior suggests new ways to understand societal rigidity and change. False beliefs and perceptions can be stable when individuals participate in networks that reinforce these as social constructions.

Fortunately, a number of interventions have had demonstrated success in reducing cognitive biases in some cultural environments.  Examples of successful efforts to change how people think and reduce cognitive biases have used self-help groups, political reservations for women in local government, sustained expansion of efforts to recruit women into the labor force, and social media. Hoff will highlight early findings of an evaluation of a participatory theater program in India in which plays highlight oppressive local norms. In repetitions of scenes, viewers can step onstage, play the role of a character, and try to persuade audiences that their construction of a solution is possible. The program has increased women’s agency.

Last Updated: Feb 03, 2016

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    Karla Hoff, Lead Economist, Research Department

    Karla Hoff is a Lead Economist and was Co-director of the World Development Report 2015 on Mind, Society, and Behavior. The Report helped launch behavioral development economics as a field. Spanning conceptual analysis and grassroots fieldwork, her research analyzes social determinants of behavior. Her papers in the American Economic Review explain how households with identical preferences and abilities but differences in wealth may self-organize into unhealthy renter communities and healthy owner-occupied communities, how cues to a stigmatized identity can impair performance and make the stigma appear justified (“equilibrium fictions”), and how Big Bang privatization in Russia produced a coordination failure that encouraged asset stripping and discouraged support for the rule of law. Her current work evaluates the impact of a participatory theater program in India that was designed to change social norms. She won an award for one of the top 50 economics papers for “Exiting a Lawless State,” co-authored with Joseph Stiglitz. She coedited two books, The Economics of Rural Organization and Poverty Traps. She has a PhD in economics from Princeton.
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    Asli Demirgüç-Kunt, Director of Research

    Asli Demirgüç-Kunt is the Director of Research in the World Bank. After joining the Bank in 1989 as a Young Economist, she has held different positions, including Director of Development Policy, Chief Economist of Financial and Private Sector Development Network, and Senior Research Manager, doing research and advising on financial sector and private sector development issues.
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    Roberta Gatti, Global Lead, Social Protection & Labor Global Practice

    Roberta Gatti is the Global Lead for labor policies in the Social Protection and Labor practice of the World Bank Group. Roberta joined the Bank in 1998 as a Young Professional in the Development Research Group. Her papers, which includes theoretical and empirical contributions on labor and household economics, political economy, growth, and social inclusion, are published in international refereed journals such as the Journal of Public Economics, the Journal of Economic Growth, and the Journal of Development Economics. After a period based in the Bank’s office in Bulgaria, Roberta became sector manager and Human Development Lead Economist in the Middle East and North Africa and then in the Europe and Central Asia regions, overseeing work on aging, skills, jobs, pensions, social safety nets, and the Roma inclusion agenda. She also worked as Lead Economist based in the Bank’s Warsaw office. She is the lead author of numerous World Bank reports, including Jobs for Shared Prosperity: Time for Action in the Middle East and North Africa and of Being Fair, Faring Better: Promoting Equality of Opportunity for Marginalized Roma. Roberta holds a Ph.D. in Economics from Harvard University and has taught at Georgetown and Johns Hopkins Universities.

The Policy Research Talks showcase the latest findings of the research department and their implications for World Bank operations. The goal of the monthly event is to facilitate a dialogue between researchers and operational staff, so that we can challenge and contribute to the World Bank's intellectual climate and re-examine conventional wisdom in current development theories and practices.  Read More »

Event Details
  • Date: February 22, 2016
  • Time: 12:30 - 2:00PM
  • Location: MC 13-121, World Bank Headquarters
  • CONTACT: Tourya Tourougui

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