Arnold Kling  

Cognitive Economics?

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Craig A. Lambert writes,

the Russell Sage Foundation, which devotes itself to research in the social sciences, consistently supported behavioral economics, even when it was in the intellectual wilderness. Current Sage president Eric Wanner, Ph.D. ’69, whose doctorate is in social psychology, was running a program in cognitive science at the Alfred P. Sloan Foundation in 1984 when Sloan started a behavioral economics program as an application of cognitive science to the study of economic decision-making. (“The field is misnamed—it should have been called cognitive economics,” says Wanner. “We weren’t brave enough.”)

...Nava Ashraf, who has worked extensively with non-governmental organizations, is now applying behavioral economics to interventions in developing countries. She lived for a year in Ivory Coast and Cameroon, where she “noticed that farmers and small-business owners were often not doing the things that a development policymaker or economist thinks they should do,” she says. “They wouldn’t take up technologies that would increase agricultural yield, for example. They wouldn’t get vaccines, even though they were free! They also had a lot of trouble saving. In January they had a lot of money and would spend it on feasts and special clothes, but in June their children would be starving.”

Still, some found ways to offset their less-than-prudent tendencies. One woman had a cashbox in her home, where she saved money regularly—and gave her neighbor the only key. Another timed the planting of her sweet-potato crop so that the harvest would come in when school fees were due. Her farm became an underground bank account that allowed withdrawal only at the proper moment.

The entire article is a helpful introduction to behavioral economics.

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COMMENTS (1 to date)
Roger M writes:

Interesting stories about the Ivory Coast and Cameroon. Econ progress is much more than aggregate spending and money supply. People working in developing countries understand how important cultural factors are. For more on this, see "Culture Matters: How Values Shape Human Progress" by Lawrence E. Harrison (Editor), Samuel P. Huntington.

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