March 6, 2015

The Wonk’s Guide to Irrational Humans

The World Bank explores behavioral economics, but what’s design got to do with it?

Every year, the World Bank’s World Development Report offers a detailed look at the state of knowledge around a single development topic. While recent reports focused on topics like jobs, risk, or gender equity, this year’s edition, titled Mind, Society, and Behavior, reflects the growing attention being given to human decision-making in development. Among wonks, it has been called the “behavioral economics World Development Report.” In reality, it is broader than that, yet narrower than it could be.

The report is framed in three dimensions: Thinking automatically, Thinking socially, and Thinking with mental models. Thinking automatically articulates how heuristics and decision-making shortcuts can lead us to suboptimal choices, drawing on the research of Daniel Kahneman and others. Thinking socially discusses the impact of social norms, expectations, and cooperation in our decision-making. Finally, thinking with mental models refers to the framing and categories we bring to our decisions.

Through this framework, the report establishes and explores the idea that humans are not always coldly rational decision-makers. Economists often present this idea as if it were surprising and slightly disappointing, but anyone who works with real humans knows that we are nuanced creatures. Our individual choices, in all their complexity, involve shortcuts and social dimensions that we’re only starting to understand.

This is critical to our sector because the outcomes of individual choices have social ramifications. This fact often gets lost or glossed over, subordinated to the policies, markets, or historical forces that are considered more consequential to development outcomes. With Mind, Society, and Behavior, the World Bank presents the case for elevating individuals’ decisions to the same level of importance.

“Human-centered” analysis: behavioral economics and design

Here at Reboot, we often use the term “human-centered” to describe our approach, especially to design. The World Development Report focuses on the discipline of behavioral economics, another “human-centered” practice. Both design and behavioral economics are increasingly popular approaches for recognizing the role of human choices at the crux of many development problems. The relationship between these two methods is still developing, and there are still unresolved differences.

There are important connections between these disciplines. The insights of behavioral economics can inform design choices. The World Development Report offers a few of these insights, noting the accumulating evidence in favor of specific practices, such as regular text message reminders to promote savings. There is also evidence for a few broader principles, such as behavior change through “social proof” approaches—i.e. emphasizing that other people are engaging in a desirable behavior such as voting, or paying taxes. Program or service designers can use these insights as heuristics of their own.

However, the two methods are not in complete alignment. Behavioral economics has a tendency to universalize, drawing insights from a particular context and applying them broadly. This is powerful but dangerous. It risks encouraging “cookie-cutter” development thinking, where solutions are applied without adaptation to context. In contrast, human-centered design has an incredible sensitivity to specific needs in a given use-case. The risk here is zooming in too close, focusing on a design’s minutiae at the expense of the needs it’s meant to serve. How many times have we seen impractical, expensive, or over-engineered solutions from designers whose focus on the design itself (and on good reviews on social enterprise blogs) sets up blinders that obscure the real people who are meant to benefit?

This tension doesn’t mean the methods are in opposition. In fact, the combination of the two could be formidable. To see how that could happen, let’s turn back to the World Development Report.

Adaptation to context

The final chapters of Mind, Society, and Behavior pivot to a topic close to my heart: adaptation in design and programs. It proposes an iterative program cycle, incorporating redefinition and rediagnosis throughout implementation (see diagram). This is a welcome emphasis on continual learning. The report further ties this process to an analysis of bias among development professionals, who struggle to understand the individuals they are meant to serve.

wdr design process

Source: 2015 WDR Team

Unfortunately, the report’s recommendations on this front fall short. These include simplistic solutions: For navigating the complexity of human motivations, the report suggests applying more social and political analysis upfront. To combat confirmation bias by development practitioners, use red teams or double-blind peer review. To understand the importance of context, implementers should engage in service trials. While these proposed solutions move us in the right direction, they feel shallow.

At their core, these proposals revolve around improving the knowledge of the interveners. That’s a worthy goal. But it starts from the perspective that development interventions are done by development organizations to beneficiaries and communities. It focuses on extracting knowledge from the end-users of development products and services so that knowledge can improve decisions made by others. Why not bring those end-users into the decision-making process? We need a deeper reexamination of the role of development practitioners.

Participatory methods and co-creation alongside users are not new to the development sector, yet they’re absent from this World Development Report. More meaningful solutions to the challenges raised would include hiring diverse teams with national staff who understand the context; giving autonomy to “development entrepreneurs” to work adaptively; increasing the range of stakeholders involved in program design and giving them feedback channels throughout implementation; or even reducing the power of experts at large institutions in the sector. These approaches can provide a useful counterbalance to the purely technical knowledge of experts, yet none of these are discussed in the report.

This is where behavioral economics and design can come together. Participatory design methods bring the end-users into the decisions about services and products that will serve them. Working with locally led teams of development practitioners, those end-users can interpret the insights from behavioral economics and adapt them to the context. In fact, in light of the biases among international development experts, those end-users are the best positioned to do this.

A further iteration on this confluence of methods involves using the field experiments popularized in behavioral economics as part of the iterative design process. For simple messaging initiatives at a large scale, such as behavior change communications, this is not so different from the A/B testing long used by marketers. For more complicated products and services, general insights from behavioral economics can influence designs, which are then subjected to in-context experimentation to ensure they are appropriate and meaningful to the users. The findings from these experiments should again be available to those same end-users who helped with design, continuing their role in iterative interpretation and design.

Promising steps forward

The World Development Report’s discussion of adaptation is why I say that this report is broader than just behavioral economics. However, the missing components of design and participation mean that the analysis is narrower than it could be.

Even still, the report moves the discussion forward. These ideas align well with the Doing Development Differently conversations and recent work like the Overseas Development Institute’s “Adapting development” report. Smart people at the World Bank and other organizations are carving out ways to do adaptive implementation in spite of institutional constraints, such as procurement or funding rules. Others are finding ways to shift those constraints altogether.

These efforts are pushing the sector toward better thinking and practice. Recognizing the importance of human biases and choices means bringing in a variety of human-centered analytical methods, such as behavioral economics and design, as well as changing our management, funding, and organizational practices to be more adaptive. This will manifest itself in many different ways across the sector. It’s up to all development practitioners to accept the challenge of turning a critical lens on our own work.

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Further resources: For other perspectives on this year’s World Development Report, check out posts from Duncan Green, Ben Ramalingam, and Timothy Taylor.

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