ideas42 co-founder Sendhil Mullainathan was recently at the World Bank, where he spoke about behavioral design and development. The World Bank’s “All About Finance” blog has a nice summary of the talk. Quite apart from anything else, the post provides a good introduction to what ideas42 is about and why it was founded:
“(M)any studies have documented the importance of psychology in all kinds of economic decisions and the assertion that people are not always and everywhere rational in their economic behavior is unlikely to raise many economist eyebrows today. Much of Sendhil’s talk was therefore devoted to thinking about what’s next, and emphasizing the point that –given how much we know about the importance of psychology in economic decisions — it is about time that we do more to translate insights from behavioral economics into the design of better products and policies — “behavioral design” to use Sendhil’s term.
Sendhil was, of course, talking specifically about the field of international development, where behavioral economics has only recently begun to make headway. In the US and other developed countries, behavioral ideas are already a part of mainstream policymaking (though much untapped potential remains). But that bit about translating behavioral economics’ insights into better products and policies is the basic idea behind ideas42 in a nutshell.
Many of the ideas Sendhil talked about are also covered in his recent Center for Global Development working paper, which you can read here (or which you can read about right here on our blog). Meanwhile, David Mackenzie at the World Bank’s Development Economics Research Group has a fun and thoughtful piece about a study of call-center workers in India by Sendhil and colleagues that Sendhil’s talk inspired him to revisit (and that inspired the choice of photograph that accompanies this blogpost).