Publication:
Biased Policy Professionals

Loading...
Thumbnail Image
Files in English
English PDF (895.46 KB)
1,093 downloads
English Text (98.2 KB)
28 downloads
Date
2017-06
ISSN
Published
2017-06
Editor(s)
Abstract
A large literature focuses on the biases of individuals and consumers, as well as "nudges" and other policies that can address those biases. Although policy decisions are often more consequential than those of individual consumers, there is a dearth of studies on the biases of policy professionals: those who prepare and implement policy on behalf of elected politicians. Experiments conducted on a novel subject pool of development policy professionals (public servants of the World Bank and the Department for International Development in the United Kingdom) show that policy professionals are indeed subject to decision making traps, including sunk cost bias, the framing of losses and gains, frame-dependent risk-aversion, and, most strikingly, confirmation bias correlated with ideological priors, despite having an explicit mission to promote evidence-informed and impartial decision making. These findings should worry policy professionals and their principals in governments and large organizations, as well as citizens themselves. A further experiment, in which policy professionals engage in discussion, shows that deliberation may be able to mitigate the effects of some of these biases.
Link to Data Set
Citation
Banuri, Sheheryar; Dercon, Stefan; Gauri, Varun. 2017. Biased Policy Professionals. Policy Research Working Paper;No. 8113. © World Bank, Washington, DC. http://hdl.handle.net/10986/27611 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    Geopolitics and the World Trading System
    (Washington, DC: World Bank, 2024-12-23) Mattoo, Aaditya; Ruta, Michele; Staige, Robert W.
    Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.
  • Publication
    Poverty Projections for Pakistan
    (Washington, DC: World Bank, 2025-01-02) Barriga Cabanillas, Oscar; Kishwar, Shabana; Meyer, Moritz; Nasir, Muhammad; Qazi, Maria
    In 2019, 21.9 percent of the population in Pakistan lived below the national poverty line. Since then, the COVID-19 pandemic, devastating floods in 2022, and a macro-fiscal crisis with record inflation have profoundly impacted economic activity and income-earning opportunities. The absence of a new household survey limits the ability to ascertain the implications of these different shocks on household welfare and poverty. Up-to-date welfare information is crucial for formulating appropriate policy responses to crises that directly affect households’ socioeconomic well-being. To overcome the lack of current data, this paper proposes a microsimulation tool that combines microdata from the latest national household survey with high-frequency macro indicators to produce nowcasts and forecasts of poverty. The tool models household consumption by using individual and household characteristics and accounts for changes in labor markets, inflation, social transfers, and remittances. The results account for household-specific inflation rates, which reflect systematic variation in household consumption patterns and sector-specific growth rates. Using the preferred specification, the findings suggest that in 2024, the poverty rate stood at 25.3 percent, an increase of seven percentage points compared to 2023, with about 13 million additional people falling into poverty. Moreover, in addition to the projected increase in poverty, poor households face disproportionately higher welfare losses and get pushed deeper into poverty.
  • Publication
    Losing to Inflation
    (Washington, DC: World Bank, 2025-01-02) Nasir, Muhammad; Kishwar, Shabana; Meyer, Moritz; Barriga-Cabanillas, Oscar
    Standard measures of inflation, such as changes in the Consumer Price Index, do not account for the different effects of inflation across income groups emerging from variations in consumption patterns and differences in price trends across consumption categories. This could understate the adverse welfare effects of inflation for poor households. For instance, previous episodes of rising food prices suggested that poor households experience higher inflation rates because food constitutes a relatively larger share of their consumption expenditures. In light of recent increases in energy and food prices in Pakistan, this paper estimates decile-wise inflation to explore the heterogeneity of inflation rates across the income distribution. The findings suggest that relatively poorer households experience higher inflation overall. The poorest households, on average, experienced inflation rates that were one percentage point higher than those faced by the wealthiest households. This paper also suggests policy recommendations to mitigate the higher inflation effects on the poor.
  • Publication
    Is the U.S. Friend-Shoring, Nearshoring, or Reshoring? Evidence from Greenfield Investment Announcements
    (Washington, DC: World Bank, 2024-12-20) Mulabdic, Alen; Nayyar, Gaurav
    This paper examines the evolution of greenfield investment announcements—both domestic and international—for US multinational companies in response to recent global shocks. The results indicate an intensification of reshoring and nearshoring activities by US companies, especially following the Russian Federation’s invasion of Ukraine. This shift is estimated to have doubled the number of direct jobs associated with greenfield investment announcements in the US and its neighboring countries. The paper finds no evidence that US companies are adopting a friend-shoring strategy by investing more in military allies. The paper suggests that US supply chains are likely to become less global and more regional as these investments become operational.
  • Publication
    Expanding Financial Inclusion through Digital Financial Services
    (Washington, DC: World Bank, 2024-12-23) Klapper, Leora
    Worldwide, account ownership increased by 50 percent in the 10 years spanning 2011 to 2021, to reach 76 percent of the global adult population. The goal of financial inclusion is not just for more adults to have accounts but for account owners to benefit from using them, such as for digital payments, which provide a range of positive benefits that extend far beyond convenience. This paper reviews the evidence demonstrating how digital payments can expand financial inclusion among recipients and encourage the use of additional formal financial services, such as savings, credit, and insurance. It explores how digital transactions offer greater security and privacy, especially for women, as well as opportunities to build a digital credit history for credit risk assessments. The introduction of digital payments to low-income adults brings some risks, however, such as fraud and phishing scams targeting accounts, over indebtedness in digital credit, and customers receiving incomplete or incorrect information on the fees and costs of financial products.
Journal
Journal Volume
Journal Issue
Citations