POTOMAC, Md. — Through the ages, philosophy has often held that people act rationally. Logic developed with this understanding in place. Chess cannot be played well without abiding by this principle. The entire field of economics, in fact, has by and large assumed rational buyers: every human decision is centered on cost-benefit analysis.
But in the 1970s, two Israeli psychologists turned this idea on its head. What if people are blind to their biases and shortcomings? What if it were rational to expect people to act irrationally? And thus was born the now-heralded and ever-relevant subject of behavioral economics.
Amos Tversky and Daniel Kahneman, the two Israeli psychologists in question, discovered through their Nobel-winning work a set of heuristics — rules that simplify decision-making — that people rely on to make judgments.
Knowledge of these heuristics has already dramatically transformed economic theory. It is hoped the same can be done for international aid organizations like USAID or UNICEF.
Heuristics can help explain why public perception of such nonprofits is so often incorrect. They can also lend some insight as to why some programs succeed, while others fall flat.
Here are a couple of them.
The Availability Heuristic
“The U.S. spends way too much on foreign aid. Way too much.”
Upon hearing such a statement, the foreign aid advocate shudders before doling out wisdom: Only 1 percent of the U.S. budget is allocated towards foreign aid. On average, however, Americans believe this number is closer to 25 percent, and that it should be 10 percent.
Kahneman and Tversky would describe this phenomenon as the availability heuristic: a reliance on examples that come immediately to mind in order to form a judgment.
In their experiments, the duo asked a question: if one were to pick an English word at random from a book, is it more likely that said work would start with ‘K’ or contain it as a third letter?
Most subjects, when posed this question, believed that those words beginning with ‘K’ would more often crop up. But they were wrong.
As Tversky and Kahneman reasoned in their 1973 paper, the subjects conflated ease of recall with frequency.
Public perception on foreign aid, it seems, is a matter of what immediately comes to mind, and not facts.
A quick Google News search of “U.S. foreign aid” brings up thousands of results. Some are about this very issue (the public misperception of U.S. foreign spending). But a larger portion includes articles describing government plans to curtail spending on foreign aid and one-sided lists that cry horror at the billions the U.S. spends.
It’s certainly common sense, but common sense is common, nonetheless.
That is why the State Department has just launched a new website, ForeignAssistance.gov, that hopes to use this availability heuristic as its own tool.
For USAID, UNICEF and others, this is only good news — and it is a great example of how recognizing heuristics can help prevent ignorance, which often allows for the reduction of foreign aid without much outcry.
The Familiarity Heuristic
In 1965, Thomas Dichter found himself in Morocco as a Peace Corps volunteer. He was there because Moroccan chickens were tough and scrawny, and far too few were being produced. USAID had decided to lead an initiative to improve chicken production so that Moroccans could eat more for less.
It was a good plan. Production experts led the breeding process and switched over to Rhode Island Red chickens, a more nutritious and hearty type of chicken. The chickens were raised and slaughtered as was expected, but when they went out to stores, Moroccans weren’t buying them.
It turns out that these new chickens were too fat and ill suited to the local cuisine and taste. Since Moroccans had adapted to the tough and scrawny chickens, cooking techniques were no longer equipped to handle a fully developed chicken. It took four hours to simply stew one. And since no one could cook them, they tasted terrible and foreign.
In the end, the project failed.
The familiarity heuristic is merely an offshoot of the availability heuristic. It describes the tendency of human behavior to favor the familiar over the novel. What one remembers more easily, one prefers.
The Moroccans encountered a new chicken and a new taste that would require new cooking techniques. Why choose the Rhode Island Red chicken if they can just buy the Moroccan chicken they are familiar with eating and cooking?
Glossing over the importance of such a common aspect of human behavior can doom development programs before they even begin. The most successful programs draw upon local cultures, and the practices they have already established.
Rwandan President Paul Kagame understands this very well.
In recent years, he has advocated for what he calls Home-Grown Solutions, a set of poverty-reducing programs that seamlessly integrate cultural practices.
Its most successful undertaking to date is known as Girinka. The program donates pregnant dairy cows to poor and needy households. It introduces nothing new, culturally; it merely takes the familiar and systemizes it into a sustainable development solution.
To read more on heuristics and biases common to our daily lives, read Tversky & Kahneman’s groundbreaking paper published in 1973; “Judgment under certainty: heuristics and biases.”
Sources: Washington Times, Foreign Assistance, Business Week, Rwandapedia, CATO, JSTOR
Photo: NYTimes