Helpdesk Report: Use of Behavioural Economics in Development Interventions

Abstract

How far has behavioural economics, and particularly 'nudging theory' been used in development interventions?  How has the impact of this approach been measured?

The concept of 'nudging' was first explained in Nudge: Improving Decisions about Health, Wealth and Happiness, a book by Thaler and Sunstein. Nudge theory is based on a libertarian paternalist approach. Libertarian paternalism contends that people should be free to do what they choose; but that it is legitimate for people's behaviour to be influenced in a positive health direction.

The 'nudge' has been taken on by some of the British policy elite, epitomised by the creation of the Cabinet Office's behavioural insights team. The reason for the political popularity of nudging is that it offers politicians a tool through which they can offer guidance, without enforcement.  Nudging has been used in many contexts, primarily in the US and UK, but also in developing countries. The extent is has been used and case studies are presented in Section 4.

Section 5 presents information on whether it has improved human development outcomes. One key criticism is that nudging focuses on changing individual behaviours in isolation from the broader determinants of health rather than combating poverty and injustice.

Section 6 considers the impact of 'nudging'. Behavioural change interventions appear to work best when they're part of a package of regulation and fiscal measures. Public health policies should be based on the best available evidence.

Citation

Holley, C. Helpdesk Report: Use of Behavioural Economics in Development Interventions. Human Development Resource Centre, UK (2012) 24 pp.

Helpdesk Report: Use of Behavioural Economics in Development Interventions

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