Why should we care about behavioral insights?

This is a question that many will undoubtedly ask.

I studied economics in graduate school to better understand the intricate relations between the economy, politics and society. However, studying mathematical models about how markets and humans should behave became frustrating. In class it seemed that the focus was always on profits, efficiency and market power, but this explanation seemed to only scratch the surface.

Working as a research assistant in the field of behavioral economics greatly shifted my perspective. I learned that stories, not just money, play a central role in the functioning of society. People create stories – world views – about how their knowledge relates to their life. The stories we use to make sense of our environment are influenced by the people that surround us. Politicians and businessmen alike base their decisions on their ideas about how the world works. This, in turn, determines what they spend money on.

All over the world, organizations are setting up behavioral insight units. These behavioral insight units are a cost-effective tool in helping governments develop more effective, evidence-based policies. Put in place by social psychologists and behavioral economists, their mission is to “nudge” or move the public towards making better decisions – decisions in all sorts of areas, for example, decisions about health, savings or the environment. Richard Thaler, the father of the nudge concept, was awarded the Nobel Memorial Prize in Economic Sciences in 2017. 

But what does this have to do with the Green Climate Fund (GCF)?

Huge investments are needed to mitigate carbon emissions and adapt to climate change. Often these costly interventions are aimed at changing people’s behavior. But what happens after the huge sums invested in these projects is spent and the project is finished? Do people really change? For that purpose, GCF aims at a paradigm shift, which puts environmental sustainability as the basis of any development effort.

This shifts attention towards social realities in project countries. Imagine the case of a young woman living in an impoverished area facing a devastating drought. The woman has grown up with very traditional gender roles and been told all her life what a woman should do. So, when she receives training on a GCF-funded project that aims to get her to change her behavior to assist the environment, will she listen to an outsider? Will she change her behavior? That depends a lot about what the woman thinks she is capable of and allowed to do. The training the woman receives can be augmented by a psychology-based exercise to reflect on what one values the most. This can help her to focus on what she wants to use the training for and give her the freedom to rewrite her story about herself. These interventions have been found to effectively reduce gender and race gaps in education. Recently, they were implemented into a development project in Madagascar.

GCF projects are not just about setting up renewable energies or reforestation. In the end, it is about securing and improving the daily lives of people. Institutions are beginning to take behavioral insights more seriously as can be seen with the Mind, Behavior and Development initiative.

Technical aspects of a project cannot be seen in isolation from the target communities and their traditions, habits, and stories. Successful projects require the creation of narratives that are both understood by the beneficiaries and aligned with their values.

Disclaimer: The views expressed in blogs are the author's own and do not necessarily reflect the views of the Independent Evaluation Unit of the Green Climate Fund.