Behavioral Economics and Public Sector Reform: An Accidental Experiment and Lessons from Cameroon

23 Pages Posted: 20 Apr 2016  

Gaël Raballand

World Bank; Université Paris I Panthéon-Sorbonne

Anand Rajaram

World Bank; London School of Economics & Political Science (LSE) - The International Growth Centre

Date Written: September 1, 2013

Abstract

Starting with the hypothesis that behaviors are the critical (and often overlooked) factor in public sector performance, this paper explores the notion of how behavioral change (and thus institutional change) might be better motivated in the public sector. The basis for this study is "an accidental experiment" resulting from the World Bank's operational engagement in Cameroon. In 2008, World Bank staff successfully concluded preparation on a project to support the Government of Cameroon to improve transparency, efficiency, and accountability of public finance management. The US$15 million project supported a number of ministries to strengthen a broad range of management systems and capacities. Independently and concurrently, other Bank staff initiated a low-profile, technical assistance project to improve performance in Cameroon's Customs, supported by a small trade facilitation grant of approximately US$300,000. One approach appears to have succeeded in initiating change while the other has signally failed. The two projects of different scale, scope and design in the same governance environment offer a very interesting natural experiment (unplanned but accidental for that reason) that allows insights into the nature of institutional change and the role of behavior and incentives and approaches that offer greater prospects for making reform possible. The paper confirms the value of using ideas from behavioral economics, both to design institutional reforms and to critically assess the approach to institutional reform taken by development agencies such as the World Bank.

Keywords: Environmental Economics & Policies, Cultural Policy, National Governance, E-Business, Public Sector Economics

Suggested Citation

Raballand, Gaël and Rajaram, Anand, Behavioral Economics and Public Sector Reform: An Accidental Experiment and Lessons from Cameroon (September 1, 2013). World Bank Policy Research Working Paper No. 6595. Available at SSRN: https://ssrn.com/abstract=2323099

Gael Raballand (Contact Author)

World Bank ( email )

701 18th street N.W.
Washington, DC 20433
United States

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Anand Rajaram

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

London School of Economics & Political Science (LSE) - The International Growth Centre ( email )

32 Lincoln’s Inn Fields
Houghton Street
London, WC2A 2AE
United Kingdom

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