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Policies conscious of behavioral principles help alleviate poverty: study
(Tianshannet) Updated: 2017-September-7 17:46:25

    CHICAGO, Sept. 6 (Xinhua) -- Policies aimed at serving the poor will be more effective if taking into account the human tendency to procrastinate and the limits poverty puts on attention spans.

    Christopher Bryan, assistant professor at the University of Chicago Booth School of Business, and co-authors from several universities and development organizations reported their findings in a paper published Tuesday in the journal Behavioral Science & Policy.

    In a recent field experiment in Chile, the scholars found that a large majority of people did not increase their savings even if banks increased interest rate by a large margin.

    But when their peers were watching, savings almost doubled when the participants in the experiment announced their savings goals to a self-help group and had their progress publicly monitored.

    The scholars focus on two well-studied psychological phenomena, present bias and limited attention.

    "Everyone has limited attentional bandwidth, but wealthy people, freed from having to spend this precious attention on acquiring food, shelter and other basics, have more attention available for handling unexpected hassles and making strategic decisions to improve their circumstances," the authors hold.

    People often fail to expend small amounts of money, time or effort up front to obtain much larger benefits in the future.

    This human tendency toward present bias is common in rich and poor populations alike, but has a larger negative effect on people with low incomes.

    The authors outlined certain simple interventions with these behaviors in mind, and the measures did work well:

    -- Helping households to fill out an application for an interest-free loan to cover the cost of piped water in Morocco increased participation from 10 percent to 69 percent.

    -- A small decrease in the purchase price of insecticide treated bed nets for avoiding mosquito-borne diseases has saved 4 million lives in sub-Saharan Africa since 2000.

    -- Health insurance providers in Tanzania went to the distribution points of a cash transfer program to sign people up for health insurance when they received the transfers, leading to a 20 percentage point increase in the use of health insurance.

    "The bottom line here is that, by taking into account even just a couple of important behavioral principles, we can improve the effectiveness of many development programs and policies, often dramatically," said Bryan, adding that "more exciting than that, we can often achieve those gains in effectiveness at little or no added cost once the policies are in place."

(SOURCES:Xinhua)Editor: Laili
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