Beyond Fads and Magic Bullets: The Promise of Behavioural Approaches in Development Economics

Abstract

The history of development economics has been portrayed as a succession of fads and magic bullets. This study inquires whether behavioural approaches to economic development are destined to become such a fad or whether they have long-lasting contributions to offer. To be considered a successful program, behavioural approaches should advance our theoretical understanding of development processes and improve the quality and effectiveness of policy recommendations. I argue that behavioural development economics is not yet a cohesive field with a consensual definition and that different directions may be taken. Whether behavioural development economics will be able to deliver on the goals depends on the direction it takes. I distinguish three different views of behavioural development economics - the scarcity view, the non-optimal behaviour view, and the psycho-social-cultural-view - and argue that to be successful, the field should embrace the psycho-social-cultural view more enthusiastically, at the expense of the pure non-optimal behaviour view. I use the behavioural literature on under-saving in the Global South - one of the most-studied domains of behaviour in the field - to substantiate these claims.

Keywords: Development economics, behavioural economics, social economics, cultural economics, under-saving, Global South