A Behavioural Theory of Economic Development: The Uneven Evolution of Cities and Regions

Curated on Posted on by Stefaan Verhulst

Book by Robert Huggins and Piers Thompson: “Innovation, entrepreneurship, knowledge, and human capital are widely acknowledged as key levers of development. Yet what are the sources of these factors, and why do they differ in their endowment across regions? Motivated by a belief that theories of economic development can move beyond the generally accepted explanations of location and the organization of industries and capital, this book establishes a behavioural theory of economic development illustrating that differences in human behaviour across cities and regions are a significant deep-rooted cause of uneven development.

Fusing a range of concepts relating to culture, psychology, human agency, institutions, and power, it proposes that the long-term differentials in economic development between cities and regions, both within and across nations, is strongly connected to the underlying forms of behaviour enacted by humans on an individual and collective basis. Given a world of finite and limited resources, coupled with a rapidly growing population — especially in cities and urban regions — human behaviour, and the expectations and preferences upon which it is based, are central to understanding how notions of development may change in coming years. This book provides a novel theory of the role of psychocultural context and human behavioural and institutional frameworks in uneven economic development on a global scale….(More)”.

Letters and cards telling people about local police reduce crime

Curated on Posted on by Stefaan Verhulst

Article by Elicia John & Shawn D. Bushway: “Community policing is often held up as an instrumental part of reforms to make policing less harmful, particularly in low-income communities that have high rates of violence. But building collaborative relationships between communities and police is hard. Writing in Nature, Shah and LaForest describe a large field experiment revealing that giving residents cards and letters with basic information about local police officers can prevent crime. Combining these results with those from Internet-based experiments, the authors attribute the observed reduction in crime to perceived ‘information symmetry’.

Known strangers are individuals whom we’ve never met but still know something about, such as celebrities. We tend to assume, erroneously, that known strangers know as much about us as we do about them. This tendency to see information symmetry when there is none is referred to as a social heuristic — a shortcut in our mental processing…

Collaborating with the New York Police Department, the authors sent letters and cards to residents of 39 public-housing developments, providing information about the developments’ local community police officers, called neighbourhood coordination officers. These flyers included personal details, such as the officers’ favourite food, sports team or superhero. Thirty control developments had neighbourhood coordination officers, but did not receive flyers….

This field experiment provided convincing evidence that a simple intervention can reduce crime. Indeed, in the three months after the intervention, the researchers observed a 5–7% drop in crime in the developments that received the information compared with neighbourhoods that did not. This level of reduction is similar to that of more-aggressive policing policies4. The drop in crime lessened after three months, which the authors suggest is due to the light touch and limited duration of the intervention. Interventions designed to keep officers’ information at the top of residents’ minds (such as flyers sent over a longer period at a greater frequency) might therefore result in longer-term effects.

The authors attribute the reduction in crime to a heightened perception among residents receiving flyers that the officer would find out if they committed a crime. The possibilities of such findings are potentially exciting, because the work implies that a police officer who is perceived as a real person can prevent crime without tactics such as the New York City police department’s ‘stop, question and frisk’ policy, which tended to create animosity between community members and the police….(More)”

Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending

Curated on Posted on by Stefaan Verhulst

Paper by Matias Giaccobasso, Brad C. Nathan, Ricardo Perez-Truglia & Alejandro Zentner: “Do perceptions about how the government spends tax dollars affect the willingness to pay taxes? We designed a field experiment to test this hypothesis in a natural, high-stakes context and via revealed preferences. We measure perceptions about the share of property tax revenues that fund public schools and the share of property taxes that are redistributed to disadvantaged districts. We find that even though information on where tax dollars go is publicly available and easily accessible, taxpayers still have significant misperceptions. We use an information-provision experiment to induce exogenous shocks to these perceptions. Using administrative data on tax appeals, we measure the causal effect of perceived government spending on the willingness to pay taxes. We find that some perceptions about government spending have a significant effect on the probability of filing a tax appeal and in a manner that is consistent with the classical theory of benefit-based taxation. We discuss implications for researchers and policy makers…(More)”.

On the Dynamics of Human Behavior: The Past, Present, and Future of Culture, Conflict, and Cooperation

Curated on Posted on by Stefaan Verhulst

Paper by Nathan Nunn: “I provide a theoretically-guided discussion of the dynamics of human behavior, focusing on the importance of culture (socially-learned information) and tradition (transmission of culture across generations). Decision-making that relies on tradition can be an effective strategy and arises in equilibrium. While dynamically optimal, it generates static `mismatch.’ When the world changes, since traits evolve slowly, they may not be beneficial in their new environment. I discuss how mismatch helps explain the world around us, presents special challenges and opportunities for policy, and provides important lessons for our future as a human species…(More)”.

A 680,000-person megastudy of nudges to encourage vaccination in pharmacies

Curated on Posted on by Stefaan Verhulst

Paper by Katherine L. Milkman et al: “Encouraging vaccination is a pressing policy problem. To assess whether text-based reminders can encourage pharmacy vaccination and what kinds of messages work best, we conducted a megastudy. We randomly assigned 689,693 Walmart pharmacy patients to receive one of 22 different text reminders using a variety of different behavioral science principles to nudge flu vaccination or to a business-as-usual control condition that received no messages. We found that the reminder texts that we tested increased pharmacy vaccination rates by an average of 2.0 percentage points, or 6.8%, over a 3-mo follow-up period. The most-effective messages reminded patients that a flu shot was waiting for them and delivered reminders on multiple days. The top-performing intervention included two texts delivered 3 d apart and communicated to patients that a vaccine was “waiting for you.” Neither experts nor lay people anticipated that this would be the best-performing treatment, underscoring the value of simultaneously testing many different nudges in a highly powered megastudy….(More)”.

Consumer Reviews and Regulation: Evidence from NYC Restaurants

Curated on Posted on by Stefaan Verhulst

Paper by Chiara Farronato & Georgios Zervas: “We investigate the informativeness of hygiene signals in online reviews, and their effect on consumer choice and restaurant hygiene. We first extract signals of hygiene from Yelp. Among all dimensions that regulators monitor through mandated restaurant inspections, we find that reviews are more informative about hygiene dimensions that consumers directly experience – food temperature and pests – than other dimensions. Next, we find causal evidence that consumer demand is sensitive to these hygiene signals. We also find suggestive evidence that restaurants that are more exposed to Yelp are cleaner along dimensions for which online reviews are more informative…(More)”.

When Do Informational Interventions Work? Experimental Evidence from New York City High School Choice

Curated on Posted on by Stefaan Verhulst

Paper by Sarah Cohodes, Sean Corcoran, Jennifer Jennings & Carolyn Sattin-Bajaj: “This paper reports the results of a large, school-level randomized controlled trial evaluating a set of three informational interventions for young people choosing high schools in 473 middle schools, serving over 115,000 8th graders. The interventions differed in their level of customization to the student and their mode of delivery (paper or online); all treated schools received identical materials to scaffold the decision-making process. Every intervention reduced likelihood of application to and enrollment in schools with graduation rates below the city median (75 percent). An important channel is their effect on reducing nonoptimal first choice application strategies. Providing a simplified, middle-school specific list of relatively high graduation rate schools had the largest impacts, causing students to enroll in high schools with 1.5-percentage point higher graduation rates. Providing the same information online, however, did not alter students’ choices or enrollment. This appears to be due to low utilization. Online interventions with individual customization, including a recommendation tool and search engine, induced students to enroll in high schools with 1-percentage point higher graduation rates, but with more variance in impact. Together, these results show that successful informational interventions must generate engagement with the material, and this is possible through multiple channels…(More)”.

COVID-19 interventions: what behavioural scientists should – and shouldn’t – be advising government on

Curated on Posted on by Stefaan Verhulst

Article by Adam Oliver: “Behavioural scientists study human behaviour, which is complex, with different phenomena driving people in different directions, and with even the same phenomena driving people in different directions depending on timing and context. When it comes to assessing the possible threat of a pandemic at its beginning, behavioural scientists simply cannot predict with any degree of accuracy whether or not people are over or underreacting. That said, behavioural scientists do have a potentially important role to play in any present and future infectious disease pandemic response, but first I will expand a little on those aspects of a pandemic where their advice is perhaps a little more circumspect.

Scientific expertise is normally focussed within very specific domains, and yet the relevant outcomes – health, social, and economic-related – of an event such as a pandemic involve considerations that extend far beyond the range of any individual’s area of competence. The pronouncements from a behavioural scientist on whether a government ought to impose policies with such far reaching implications as a national lockdown should thus be treated with a healthy degree of scepticism. To use an analogy, if a person experiences a problem with his or her car and doesn’t possess the skills to fix it, s/he will seek the expertise of a motor mechanic. However, this does not mean that a mechanic has the requisite skills to manage effectively General Motors…

My suggestion is for behavioural scientists to leave the judgments on which interventions ought to be introduced to those appointed to balance all relevant considerations, and instead focus on assessing how the introduced interventions might be made more effective with input from their knowledge of behavioural science. There are, of course, many domains of policy – indeed, perhaps all domains of policy – where behavioural science expertise can be usefully deployed in this way, including in relation to interventions intended to get the economy moving again, in securing volunteering behaviours to help the vulnerable, to encourage people to report and escape from domestic abuse, etc. But in terms of assessing policy effectiveness, perhaps the most visible ways in which behavioural scientists have thus far been involved in the pandemic response is in relation to interventions intended to limit the spread of, and enhance resistance to, the virus: i.e. handwashing, social distancing, mask wearing, voluntary testing, and vaccine uptake….(More)”.

Deliberate Ignorance: Choosing Not to Know

Curated on Posted on by Stefaan Verhulst

Book edited by Ralph Hertwig and Christoph Engel: “The history of intellectual thought abounds with claims that knowledge is valued and sought, yet individuals and groups often choose not to know. We call the conscious choice not to seek or use knowledge (or information) deliberate ignorance. When is this a virtue, when is it a vice, and what can be learned from formally modeling the underlying motives? On which normative grounds can it be judged? Which institutional interventions can promote or prevent it? In this book, psychologists, economists, historians, computer scientists, sociologists, philosophers, and legal scholars explore the scope of deliberate ignorance.

Drawing from multiple examples, including the right not to know in genetic testing, collective amnesia in transformational societies, blind orchestral auditions, and “don’t ask don’t tell” policies), the contributors offer novel insights and outline avenues for future research into this elusive yet fascinating aspect of human nature…(More)”.

Nudges: Four reasons to doubt popular technique to shape people’s behavior

Curated on Posted on by Stefaan Verhulst

Article by Magda Osman: “Throughout the pandemic, many governments have had to rely on people doing the right thing to reduce the spread of the coronavirus – ranging from social distancing to handwashing. Many enlisted the help of psychologists for advice on how to “nudge” the public to do what was deemed appropriate.

Nudges have been around since the 1940s and originally were referred to as behavioural engineering. They are a set of techniques developed by psychologists to promote “better” behaviour through “soft” interventions rather than “hard” ones (mandates, bans, fines). In other words, people aren’t punished if they fail to follow them. The nudges are based on psychological and behavioural economic research into human behaviour and cognition.

The nudges can involve subtle as well as obvious methods. Authorities may set a “better” choice, such as donating your organs, as a default – so people have to opt out of a register rather than opt in. Or they could make a healthy option more attractive through food labelling.

But, despite the soft approach, many people aren’t keen on being nudged. During the pandemic, for example, scientists examined people’s attitudes to nudging in social and news media in the UK, and discovered that half of the sentiments expressed in social media posts were negative…(More)”.