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Behavioral Design: A New Approach to Development Policy

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  • Saugato Datta
  • Sendhil Mullainathan

Abstract

Successful development programs rely on people to behave and choose in certain ways, and behavioral economics helps us understand why people behave and choose as they do. This paper sketches how to design development programs and policies in ways that are cognizant of and informed by the insights behavioral economics provides into human behavior. It distills the key insights of behavioral economics into a parsimonious framework about the constraints under which people make decisions. It then shows how this framework leads to a set of design principles that can be employed to design programs in areas including health, education, productivity, agriculture, finance, and the delivery of public services. Finally, it offers some reflections on the ways in which these insights and design principles can be incorporated into existing and planned programs to improve their reach and effectiveness.

Suggested Citation

  • Saugato Datta & Sendhil Mullainathan, 2014. "Behavioral Design: A New Approach to Development Policy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 7-35, March.
  • Handle: RePEc:bla:revinw:v:60:y:2014:i:1:p:7-35
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    File URL: http://hdl.handle.net/10.1111/roiw.12093
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    Cited by:

    1. Markus Jäntti & Ravi Kanbur & Jukka Pirttilä, 2014. "Poverty, Development, and Behavioral Economics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 1-6, March.
    2. Jacopo Bonan & Pietro Battiston & Jaimie Bleck & Philippe LeMay-Boucher & Stefano Pareglio & Bassirou Sarr & Massimo Tavoni, 2017. "Social Interaction and Technology Adoption: Experimental Evidence from Improved Cookstoves in Mali," Working Papers 2017.47, Fondazione Eni Enrico Mattei.
    3. Jan Ostermann & Derek Brown & Axel Mühlbacher & Bernard Njau & Nathan Thielman, 2015. "Would you test for 5000 Shillings? HIV risk and willingness to accept HIV testing in Tanzania," Health Economics Review, Springer, vol. 5(1), pages 1-11, December.
    4. Kanbur, Ravi, 2015. "Education For Climate Justice," Working Papers 250015, Cornell University, Department of Applied Economics and Management.
    5. Datta,Saugato & Miranda Montero,Juan Jose & Zoratto,Laura De Castro & Calvo-Gonzalez,Oscar & Darlingm,Matthew & Lorenzana,Karina Josephine Orduna, 2015. "A behavioral approach to water conservation: evidence from Costa Rica," Policy Research Working Paper Series 7283, The World Bank.
    6. Elabed, Ghada & Carter, Michael R., 2015. "Compound-risk aversion, ambiguity and the willingness to pay for microinsurance," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 150-166.
    7. Sanjit Dhami & Ali al-Nowaihi, 2018. "Rationality in Economics: Theory and Evidence," CESifo Working Paper Series 6872, CESifo Group Munich.
    8. Emma Boswell Dean & Frank Schilbach & Heather Schofield, 2017. "Poverty and Cognitive Function," NBER Chapters,in: The Economics of Poverty Traps National Bureau of Economic Research, Inc.
    9. Vandercasteelen, Joachim & Dereje, Mekdim & Minten, Bart & Taffesse, Alemayehu Seyoum, 2013. "Scaling-up adoption of improved technologies: The impact of the promotion of row planting on farmers’ teff yields in Ethiopia:," ESSP working papers 60, International Food Policy Research Institute (IFPRI).
    10. Alex Imas & Diego Lamé & Alistair J. Wilson, 2016. "Regret in One-Shot and Recurrent Decisions: A Cautionary Tale," CESifo Working Paper Series 5939, CESifo Group Munich.
    11. Marta Barazzetta & Simon Appleton & Trudy Owens, 2015. "Hedonic adaptation to treatment: Evidence from a medical intervention," Discussion Papers 2015-08, University of Nottingham, CREDIT.
    12. Marc Labie & Carolina Laureti & Ariane Szafarz, 2016. "Discipline and Flexibility: A Behavioral Perspective on Product Design in Microfinance," Working Papers CEB 15-020, ULB -- Universite Libre de Bruxelles.

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