Sunday, January 17, 2010

Behavioral Economics and Afghan War

My immense belief (here and here) in behavioral economics always nudges me to lookout for confirmation bias and most of the time it get more than a dose of bias. Here is story from Tim Harford, right out the "nudge team" text book but this time in Afghan:

"
The story – told by Major General Andrew Mackay CBE and Commander Steve Tatham in a new paper on “Behavioural Conflict” for the UK’s Defence Academy – illuminates the situation facing coalition forces in Afghanistan. There has been a tendency among commentators and politicians to treat the “hearts and minds” aspect of counter-insurgency as a popularity contest. But the “voters” are not casual spectators, trying to choose between the Taliban or the coalition forces; they are individuals weighing up complex choices in difficult circumstances.
I met Andrew Mackay, who commanded 52 Brigade in Helmand Province (and who announced his resignation from the army in September), because of his interest in the problem of influence in conflict situations. He was reading books about behavioural economics, including my own, in the hope of adding some insight to experience gained in the field.



Some of the more successful tactics in Iraq and Afghanistan have indeed been built on the simple economists’ prescription: if you want to change behaviour, change incentives. For example, killing insurgents without holding territory did not encourage co-operation from bystanders, as anyone who had collaborated would be killed when the insurgents returned. When coalition forces switched to the tactic of holding territory and preventing the return of insurgents, people became happier to share information.

The more psychologically detailed insights of behavioural economics may also be promising. Mackay and Tatham cite Afghanistan’s National Solidarity Programme as an example of the “choice architecture” described by policy guru Cass Sunstein and the behavioural economist Richard Thaler. The NSP handed out grants to villages, provided the village leaders were elected by secret ballot, held communal meetings, and posted accounts in a public place: a nudge towards better governance."

Of course there are limitations to this but lets first put it use in diverse fields to get best out of people without worrying about the threshold level.

The paradox of behavioral economics is, it's probably the only field which gets a free ticket to call us, the people "idiots" while making us feel like Einstein's.

The premise of behavioral economics is to make us unconsciously realize the "DUH" and it works.

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