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Behavioural economics, experimentalism and the marketization of development



Using market-based pro-poor development policy in the global South as an example, this paper engages with the rise of behaviourism and experimentalism as a challenge to the neoclassical orthodoxy and the more recent transformation into an influential policy script. After charting the rise of behavioural economics and discussing the key conceptual building blocks of the emerging behavioural mainstream in economics, the paper turns to the marketization of anti-poverty policy in the global South. Based on an analysis of policy documents, project reports and academic interventions, it is argued that the behavioural approach to poverty shifts the focus from the market to the market subject and engages in often thinly veiled attempts at behavioural engineering. This is achieved with the combined work of behavioural economic knowledge and socio-technical market devices.
Behavioural economics, experimentalism and the marketization of devel-
Christian Berndt
Department of Geography
University of Zurich, Switzerland
Forthcoming in Economy and Society (DOI:10.1080/03085147.2015.1043794)
Abstract: Using market-based pro-poor development policy in the global south as an exam-
ple, this paper engages with the rise of behaviourism and experimentalism as a challenge to
the neoclassical orthodoxy and the more recent transformation into an influential policy script.
After charting the rise of behavioural economics and discussing the key conceptual building
stones of the emerging behavioural mainstream in economics, the paper turns to the market-
ization of anti-poverty policy in the global south. Based on an analysis of policy documents,
project reports and academic interventions it is argued that the behavioural approach to pov-
erty shifts the focus from the market to the market subject and engages in often thinly veiled
attempts of behavioural engineering. This is achieved with the combined work of behavioural
economic knowledge and sociotechnical market devices.
Keywords: Behavioural economics, experiments, marketization, pro-poor development, ge-
Standard economic thinking about what constitutes economy and economics has been increas-
ingly called into question by approaches such as behavioural economics, experimental eco-
nomics or game theory. These approaches take aim at key foundational principles of neoclas-
sical economics and redefine the discipline as a more realistic empirical and experimental
endeavour (Heukelom, 2012, p. 20; Santos, 2011). Emerging from a lively exchange between
economists, mathematicians and psychologists during the 1950s and 1960s, they have a lot in
common, above all a shared interest in experimental, empirical work and inductive reasoning.
Existing differences notwithstanding, it is justified in the light of this shared intellectual herit-
age to speak of a broader behavioural project as a challenger to standard economic theory.
The increasing importance of behavioural economics has not gone unnoticed in the social
sciences more generally. There is a fledgling critical debate on the broader implications of the
revival of behaviourism in economics. One strand of this debate takes issue with the represen-
tation of the broader behavioural project as a challenger to neoclassical economics. Behav-
ioural economics may wage a serious challenge, but neoclassical scholars still call the shots in
the discipline and continue to have the ear of politicians worldwide. What is more, there re-
mains substantial intellectual continuity underneath the rebellious surface. By positing that
rational behaviour can be learnt, behavioural economics may ultimately strengthen the belief
in the efficient self-regulating market (e.g. Etzioni, 2010, pp. 380-381; Streeck, 2010). Anoth-
er strand of criticism engages with the depoliticization of market-oriented interventions and
problematizes the public policy effects of behaviourist approaches (Santos, 2011, p. 719;
Pykett, 2012, 2013; see also Jones et al., 2013). A key area in this context is finance, contri-
butions discussing the influence of behavioural economics on state pension policies (e.g.
Strauss, 2008, 2011) and the role of behavioural thought in providing alternative accounts of
the 2007/2008 financial crisis (Boeckler & Berndt, 2013; Wojcik et al., 2013).
I take both literatures as a starting point for my own paper, being convinced that the
political implications of the ‘behavioural and experimental turn’ in economics warrant critical
attention. Heeding Timothy Mitchell’s (2005, p. 298) reminder that economics ‘is important
not just for what it says but for what it does’, I start from the assumption that the stylized rep-
resentation as standard economic theory’s foe plays an important role in successfully trans-
forming behavioural economics into an increasingly successful policy script.1 My particular
focus in this paper is on the impact of behaviourism and experimentalism on anti-poverty pol-
icy in rural regions of the global south. It is important in the light of this focus to briefly clari-
fy what this paper is about empirically: First, I analyse a particular area of development policy
and have little to say about the policy influence of behavioural economics in the global south
more generally. But I would maintain, with all due caution, that behavioural thinking and the
use of experiments and games to change individual behaviour is certainly not limited to poor
smallholders. Behavioural economics and its methodological apparatus inform anti-poverty
interventions in a vast array of social and economic policy fields in rural and urban settings of
the global south. Second, I argue that the interventions analysed in the paper aim at aligning
individual behaviour with idealized notions of market rationality and entrepreneurialism. This
is not to say, however, that the insights of behavioural economics are only implemented in
this way. The work of James Ferguson or Jamie Peck on conditional cash transfers, for in-
stance, illustrates that these interventions may have more ‘progressive’ effects (Ferguson,
2007; Peck, 2011). Third, individual behavioural change is not the only way in which the de-
velopment industry intervenes into the lives of the rural poor. There is a proliferation of poli-
cy discourses, and interventions informed by behaviourism are only one of them.2 And final-
ly, by analysing policy documents and project material, I do not make claims regarding the
way these interventions actually play out ‘on the ground’. By considering the material devices
of behavioural engineering I make a step towards this direction, but the practical materializa-
tion is an open question that can only be answered empirically.
The research presented in this paper is inspired by a literature which – following
Michel Callon and Koray Çalışkan might be loosely termed ‘social studies of economiza-
tion’ (Çalışkan & Callon, 2010). Rather than asking what economy and economic behaviour
is, research in this tradition is interested in the processes that render behaviours, institutions
and rules of the game ‘economic’ (Callon, 2009, p. 22). In collaboration with Marc Boeckler I
have worked on a geographical translation of this approach putting particular emphasis on
marketization, that is, the intricate formation and expansion of markets as a particular modali-
ty of economization (Berndt & Boeckler, 2011, 2012). Labelled ‘geographies of marketiza-
tion’ the focus is on the market as the ideal site of rational decision-making and on political
attempts to align our socio-spatial realities with this utopian idea. Concrete markets are con-
ceptualized as the result of specific constellations of people and things that shape products,
prices, procedures, places of exchange and mechanisms of operation and control. The people
in question are ‘economists’ widely defined, and the ‘things’ are market devices and settings,
that is, calculative tools, scripts and procedures through which markets are given form.
In what follows, I develop my argument in three steps. The first section charts the rise of be-
haviourism and experimentalism in economics and discusses the key conceptual building
stones of the emerging behavioural mainstream. It does so by pointing to three aspects that
provide the framework for the subsequent discussion of the case study in the second part of
the paper: (1) a shift of attention from the market to the market subject, that is, from market
failure to behavioural failure, and from market regulation to behavioural engineering; (2) the
formulation of libertarian paternalism as a policy script that is capable of overcoming both the
perceived shortcomings of the interventionist state and the self-regulated market; and (3) the
development of a wide-ranging apparatus of devices and scripts that frame the settings in
which behavioural engineering assumes concrete form. The second section then turns to the
case-study. Based on a discourse analysis of policy documents and project reports I recon-
struct the specific way in which the behavioural and experimental apparatus is being translat-
ed into the marketization of smallholders in the global south. I demonstrate that behavioural
and experimental rationalities connect in ambivalent ways with classical tropes of moderniza-
tion and their accompanying culturalist representations, and with a particular understanding of
the state as failing and absent. In the final section, I argue that the discursive articulation of
perceived backwardness and marginality is a key element in the practical realization of behav-
iourist ideas. This allows the development industry to transform a problem into an opportunity
that can be realized with the help of behavioural engineering, thereby decontextualizing and
rendering technical what are in fact highly contested situations.
1. Behaviourism, experimentalism and social engineering
Having been side-lined in economics during the 1950s and 1960s, behaviourism received a
new breathe of life when it came into contact with advances in cognitive psychology. In the
early 1970s psychologists Daniel Kahneman and Amos Tversky co-authored a number of
articles that criticized the rational-agent model. Arguably the most important intervention has
been a paper that argues that people rely on a limited number of heuristic principles when
making decisions under conditions of uncertainty (Tversky & Kahneman, 1974).
Following from this, Kahneman and Tversky detected an asymmetry in people’s preferences:
responses to losses are consistently much more intense than responses to corresponding gains.
Subsequently termed ‘loss aversion’ and put under the label of ‘prospect theory’, these in-
sights caught the interest of the economist Richard Thaler. In 1980 Thaler published a paper
on consumer theory (Thaler, 1980) that has been identified by Kahneman as ‘the founding
text of behavioural economics’ (Kahneman, 2002a, p. 12). Subsequent joint research between
Kahneman, Thaler and others then established behavioural economics as a discipline finally
taken seriously by economists. There is no better proof for this assessment than the award in
2002 of the Nobel Prize in Economics to Kahneman.3
The insights from Kahneman, Tversky, Thaler and others would be unproblematic for
standard economic theory as long as these deviations were small and idiosyncratic, that is, if
there was reason to assume that they would on average cancel themselves out. The problem,
however, is the universalist claim that there are systematic biases built into people’s choices
which prevent utility maximization. This is a direct challenge, at least for those who retain
some notion of expected utility maximization as a unifying principle and for those who regard
economics as a scientific endeavour capable of explaining actual, real human behaviour.
At a time of mounting scepticism about the political applicability of neoclassical economics
behaviourism was quickly able to fill the void. The translation of behavioural thought into the
policy realm builds on three interrelated extensions of the insights put forward by cognitive
psychologists: First, the conceptual distinction between relatively more and relatively less
rational individuals (humans and econs); second, the appropriation of a political script that
chimes well with advanced liberal policy programs (libertarian paternalism and politics of
local responsibility); and, third, the shift from the market to the individual market subject as
the principle target of policy interventions (from markets to market subjects).
Humans and econs
During the more immediate past behavioural economics has transformed from a positive intel-
lectual project, that is, a challenge to mainstream economists’ pretentions to describe and pre-
dict what people actually do, into a normative endeavour, that is, engaging in attempts to
change the way people behave. A key assumption from cognitive psychology plays a crucial
role in this context. This concerns the distinction between two cognitive systems that is re-
ferred to as ‘dual process model’ in psychology. The argument is that judgments can ideally
be produced in two ways, ‘a rapid, associative, automatic, and effortless intuitive process
(sometimes called System 1), and a slower, rule-governed, deliberate and effortful process
(System 2)’ (Kahneman, 2002a, p. 8). System 1 is automatic and unconscious. This is the
realm of emotions and believed to represent how people normally make decisions under con-
ditions of uncertainty. System 2 is rule-based, rational and explicit. It ‘monitors’ system 1 and
is able to rationalize ideas and feelings that were generated by system 1. It is also able to cor-
rect or replace erroneous intuitive judgments. However, this does not happen all the time.
System 2 has its limits and this is believed to explain the persistence of intuitive illusions
(Kahneman, 2002b, p. 451).
What is interesting from the perspective of this paper is how the dual process model
travelled from psychology into economics. In his seminal article Richard Thaler (1980, p. 57)
uses the dual process model to criticize standard economics as a positive discipline, illustrat-
ing his argument by extending the example of a billiard player developed by Milton Friedman
and L.J. Savage. An expert player can be expected to choose the best shot in any situation.
Her performance would not deviate much from the optimum as suggested by a mathematical
formula. The expert billiard player is almost perfectly rational, resulting in the most efficient,
the best solution. Intermediate or novice players, on the other hand, operate with different
models. Both use heuristics and rules of thumb and both are ‘rational’ in the context of these
frames. They do the best they can. But at the same time their performance generates subopti-
mal outcomes. ‘How does consumer behaviour relate to billiard behaviour?’, concludes Tha-
ler (1980, p. 58; emphasis added), ‘Again there will be various classes of consumers. Some
will be experts (Ph.D's in Economics?), others will be novices (children?) these shoppers
are doing the best they can’.
The world of the two cognitive systems is therefore also the world of different types of
people. On the one hand are the experts who are (almost) rational, on the other ordinary peo-
ple who rely on emotions, affect, and rules of thumb, and are locked in suboptimal outcomes.
In so doing, the perfect rationality assumption re-enters the stage through the backdoor. Be-
havioural economists share the normative view that rational maximization is what people
should do.
Third way: libertarian paternalism and politics of local responsibility
Another key aspect concerns the appropriate institutional arena for policy interventions. Both
market and state are found wanting. The former cannot be trusted to realize itself all on its
own. Operating mainly along system 2, the latter is incapable of reaching people in those in-
stances when they operate only in the world of heuristics and rules of thumb. Behavioural
economics therefore appears to occupy the middle ground. A crucial step in this context has
been Richard Thaler and Cass Sunstein’s 2008 book ‘Nudge: Improving Decisions about
Health, Wealth and Happiness’, a ‘bestseller and bible of behavioural economics’ (Kahne-
man, 2011, p. 412) that has opened the world of politics to behavioural thinking.4 In this liter-
ature an institutional frame is suggested that is capable of intervening politically with as much
state as necessary and as much free market as possible. The means with which to achieve this
‘best-of-both-worlds’ scenario is asymmetric or libertarian paternalism. Both terms depict
policies that are ‘smart’, that is, policies that help those who are less sophisticated cognitively
‘while imposing little or no harm on those who are fully rational’ (Camerer et al., 2003, p.
1212; see also Thaler & Sunstein, 2008, p. 249). Once again, the dual process model looms
large in these accounts. Thaler and Sunstein attach labels to both sides. On the one hand are
ideal type ‘econs’, fully rational and modelled after the famous homo economicus. On the
other side are imperfect ‘humans’, driven by system 1 with system 2 only delivering spurious
checks and balances (Kahneman, 2011, p. 413; Thaler & Sunstein, 2008, p. 7).
Nudging is about the construction and management of incentive structures in order to channel
the behaviour of “humans” into a direction that is deemed socially beneficial. There is a pref-
erence for small-scale, context-driven policy interventions that mainly mobilize relations in
the family, in the neighbourhood, or at the urban and regional scale. Confronted with chal-
lenges that originate elsewhere, the argument goes, we have to assume responsibility both for
our own life and our immediate environment.
From markets to market subjects: Experimentalism and behavioural engineering
In a recent paper, the economists Gary E. Bolton and Axel Ockenfels (2012) coined the term
‘behavioural economic engineering’ as a label for ‘the science of designing real-world institu-
tions and mechanisms that align individual incentives and behavior with the underlying goals’
(p. 666). Moving from ‘description to prescription’ (p. 674), the gradual translation of behav-
ioural economic thinking into a toolbox for political interventions has a lot to do with experi-
mental methods. A crucial step has been the development of the field experiment. Although
experiments are ideally based on a perfectly controlled design, there are always sources of
uncertainty (i.e. selection bias). With the introduction of the field experiment this problem has
been acerbated, resulting in a number of methodological innovations to retain as much control
as possible. On the one hand, researchers can draw on different models of experimental de-
sign that help stabilizing the process. On the other hand there is randomization, a process that
is used to neutralize differences between groups. Subjects are assigned randomly to either
control or experimental group, under the assumption that variations with regard to unidenti-
fied factors will be distributed evenly across the groups (Guala, 2005, p. 62ff). Although the
underlying principle is the classical economic notion of ‘ceteris paribus’, randomization trav-
elled into economics from the medical world. Here, the so-called randomized controlled trial
(RCT) has long been an established procedure in the context of clinical investigation.
Randomization plays a crucial role in the spread of behavioural thinking into the poli-
cy realm. While this includes examples in the global north, it has been in the context of devel-
opment in the global south that this technology has really taken off. Here, both behaviourism
and experimentalism have joined forces to create an ambitious research program that has
enormous implications for the formulation of anti-poverty programs in the global south.
2. The marketization of anti-poverty policy in the global south
In 2008 the Kenyan Government launched ‘Vision 2030’ with the aim to transform Kenya
into ‘a newly-industrialized, middle income country’ (World Bank, 2009, p. 1). The agricul-
tural sector plays a key role, Kenya’s development goals including increases in productivity
and private sector involvement. Being in accordance with its priorities, the World Bank has
actively encouraged this policy with a longer-term Adaptable Program Loan. Two intercon-
nected projects have been funded: The Kenya Agricultural Productivity Project (KAPP, 2004-
2008) and the Kenya Agricultural Productivity and Agribusiness Project (KAPAP, 2010-
2015). A key element of KAPAP is ‘Agribusiness and Market Development’, organized
around four selected value chains in Kenya’s key geographical regions. In Northwestern Ken-
ya the targeted commodity are grains, above all maize, and the aim of this program compo-
nent is to transform smallholder agriculture, increasing productivity by building entrepreneur-
ship and encouraging modern farming practices. This is accompanied by the provision of fi-
nance that builds on ‘Kilimo Biashara’ (commercializing or marketizing agriculture), a credit
facility initiated to support the transformation of the agricultural sector into a commercialized
entity capable of generating employment and reducing poverty (World Bank, 2013, p. 5).
In the years 2003 and 2004, a team of researchers led by development economist Es-
ther Duflo conducted randomized experiments with smallholders in the Busia District, a re-
gion located in western Kenya at the border with Uganda and covered by the World Bank-
financed projects mentioned above. The experiments centred on the question of how best to
encourage smallholders to use fertilizer in agricultural production. Criticizing the ongoing
debate in development economics between advocates of laissez-faire policies and those who
are in favour of government subsidies, Duflo and co-researchers start with the assumption that
it is behavioural biases that limit investment in modern agricultural inputs. Smallholders tend
to spend new income (e.g. after harvest) immediately rather than saving it for productive in-
vestment in the next growing season, a behaviour that locks them into a poverty trap. Howev-
er, even poor farmers, it is argued, could reallocate some proportion of their harvest from con-
sumption to fertilizer investment. The authors subsequently recommend ‘a “paternalistic liber-
tarian” (Thaler & Sunstein, 2008) approach of small, time-limited discounts’ (Duflo et al.,
2011, p. 2353). They design a ‘model of procrastination’ and test the model’s predictions with
a randomized field experiment that involves a number of devices with which to motivate
smallholders to behave more rationally: these include personal and text message reminders in
various forms, and the opportunity to commit themselves ex ante by buying vouchers that
entitle them to buy fertilizer to a 15 per cent discount for a limited time period. The results by
and large appear to validate the behavioural assumptions. Smart, small-scale nudges perform
better than large-scale government subsidies and measures that aim solely at the reduction of
informational asymmetry. These interventions are said to be ‘smart’ because they ‘encourage
fertilizer use without distorting decision making and inducing excessive use of fertilizer’
(Duflo et al., 2011, p. 2389).
It is possible to connect the fertilizer experiments in Busia with the restructuring of
Kenyan smallholder agriculture, global commodity chains and the workings of the develop-
ment industry. First, international donor agencies play an active role in the drive towards
market-based anti-poverty interventions in Kenya. USAID, the US government development
agency, has adopted behavioural and experimental methods to evaluate and implement devel-
opment interventions, and has embarked on ‘market design’ as a policy tool (see, for instance,
the dialogue between Duflo and USAID representatives in USAID, 2011). USAID is also
amongst the key funding bodies of the Kenya Maize Development Program (KMDP) and
KAPAP, and of attempts to upgrade the maize value chain in Kenya. Second, there is the cru-
cial role of international and national NGOs that operate as project implementers. The re-
search team around Duflo enlisted ICS-Africa (Invest in Children and their Societies (ICS) is
a Dutch NGO) and its relations to smallholders in Western Kenya to design and evaluate the
fertilizer program. USAID co-operates with One Acre Fund, a US American NGO operating
from Western Kenya. In the joint ‘Kenya Asset-Based Financing for Smallholder Farmers
Project’ smallholders are nudged with ‘Tatu Hadi Tatu’, a maize storage pledge that encour-
ages farmers to store at least three bags of maize in order to provide them with enough food to
last through the peak hunger season. The final project report concludes with the success story
of a female smallholder in the Busia District (One Acre Fund, 2013). Finally, there are private
businesses establishing the link to agricultural value chains and export markets. A case in
point is Nafics, a Kenyan maize trading company whose aim it is to ‘improve the livelihood
of smallholder farmers in a profitable way, by filling in the imperfections in the Western
Kenyan maize supply-chain, specifically in Busia and Kakamega in Western Kenya’ (source:
company homepage). Nafics is listed by ICS-Africa as a partner in its ‘Agribusiness Project’
providing smallholders with farm inputs (such as hybrid seed, fertilizer) on credit ‘for the
purposes of ensuring timely planting, adherence to modern farming technologies and to in-
crease the harvest’ (ICS, n.d.).
In the Western Kenyan field laboratory smallholder maize farmers are addressed as
risk-taking, entrepreneurial subjects who are disentangled socially and geographically, allow-
ing them to be integrated into global agricultural markets. In doing so, the assemblage of do-
nors, academics5, nudges, experiments, NGOs, government organizations, private telecom-
munication companies and so on that works together to increase agricultural productivity is a
good example for the stimulation of growth in smallholder agriculture (Collier & Dercon,
2014, p. 93). A heterogeneous development community is actively implicated in the extension
of capitalist market relations and/or the reconfiguration of the ways in which people and plac-
es in the global south are articulated with global commodity circuits.6
Being part of a broader ‘consensus on poverty alleviation’ that aims to incentivize
risk-taking and entrepreneurial behaviour (Peck, 2011, p. 165), a confusing array of templates,
frameworks and programs emerged, all designed to enable the world’s rural poor to better
profit from market integration. Prominent examples in this context are the ‘Making Markets
Work for the Poor Approach (M4P)’, which originated as a joint initiative between the UK
(DFID) and Swiss (SDA) development agencies in the early 2000s, and programs that mobi-
lize the value chain for pro-poor market development. The transformation of the global value
chain into a development tool, in particular, has recently started to come under critical scruti-
ny (see Ouma et al., 2013; Werner et al., 2014). It is important to note in this context that just
as in the discussion about Kenya above it is a wider network of actors that gives form to mar-
ket-oriented anti-poverty interventions. ‘Economists in the wild’, including the representatives
of donor agencies, NGOs or private companies, drive the marketization of anti-poverty policy
in the global south and translate the knowledge generated by academic economists into devel-
opment practice.
Empirically, my case study is based on two bodies of interrelated literature. On the one
hand, this concerns 42 policy documents from multinational organizations such as World
Bank, OECD and FAO, and from national donor agencies that provide frameworks for mar-
ket-based policies against poverty in rural settings. Nationally, my focus is on donors in the
UK (DFID), Germany (DIZ), Switzerland (SDC) and the US (USAID) as key drivers of mar-
ket-based development. On the other hand I analysed project material from a range of
sources. This body of texts comprised longer documentations and evaluations as well as
shorter summaries of development projects. Texts were sampled by following leads in the
policy documents and from the US-based online archives of the World Bank (e.g. Policy Re-
search Working Papers), J-PAL (Abdul Latif Jameel Poverty Action Lab at MIT), BREAD
(Bureau for Research and Economic Analysis of Development at Duke University), and the
National Bureau of Economic Research (NBER). This search generated about 50 documents
that were authored by a heterogeneous set of authors, including representatives of implement-
ing NGOs, the academy, donors and multinational organizations. I included these texts to get
a better grasp at the practical implementation of market-based anti-poverty interventions, be-
ing aware that these documents create their own realities and are driven by a need to legiti-
mize the work performed by ‘development economists in the wild’ (see Mosse, 2005 for a
detailed discussion). Although there is documentation of projects in other regions of the glob-
al south, the texts have their geographical focus on Sub-Saharan Africa and Southeast Asia, as
key sites of pro-poor market development interventions.7
In what follows, I discuss the argumentative structure of the analysed documents as a
sequence of three connected steps: First, the assumption that universal ‘behavioural failures’
play out more negatively if you are poor; second, the representation of the rural population as
being divided between a poor, ‘non-rational’ group comprised of smallholders, and a ‘non-
poor’, (almost) rational group of entrepreneurial farmers; third, the legitimization of behav-
iourist interventions with the claim that market rationality can be practiced and learnt.
‘Problems within individuals’
The starting point is the acknowledgement that markets are critical for poverty reduction, but
‘particular[ly] fail the poor’ and ‘in the specific context of poor rural areas ... may be too thin’
(Department for International Development, 2005, p. 2; see also Ferrand et al., 2004, p. 11).
In trying to explain why markets are not working as they should do according to economic
theory the documents regularly draw a line between the individual person and his/her envi-
ronment, and acknowledge ‘internal’ and ‘external’ obstacles to more entrepreneurial and
productive behaviour. How ‘the cognitive’ and ‘the social’ relate gets obvious with a view to
the three key ideas informing the 2015 World Development Report. These concern, first, the
idea that people think fast, relying on intuition more often than careful analysis’ (emphasis
added; World Bank, 2014; compare Kahneman, 2011), and the claim that ‘people make most
judgments and most choices automatically’ (World Bank, 2015, p. 3) respectively. In addition
to this there is, second, the acknowledgement that people think ‘with mental models’ and,
third, the insight that their behaviours often depend on ‘what others around them do and
think’ (thinking socially; ibid.). At the end of the day, it is argued that the main reason for
market failure is the poor themselves. Rather than solely being interested in improving institu-
tions to solve ‘problems between people’, the emerging behavioural approach to poverty
therefore puts emphasis on ‘problems within individuals’ (Mullainathan, 2005, p. 67; empha-
sis removed from original) and the ‘cognitive, motivational and even sociological limits on
action’ (Anand & Lea, 2011, p. 284).
In this context, it is important to briefly reflect on how ‘the poor’ are conceptualized in
behavioural economics. Behavioural economists take issue with the neoclassical position that
‘the poor’ have nothing special about them and behave just as rationally as other people.
Against this it is argued that poverty poses constraints on economic decision-making that re-
sult in inefficient outcomes (Duflo, 2006, p. 367; Mani et al. , 2013). The documents analysed
for the purpose of this paper share this view. This is little surprising, given that the neoclassi-
cal position does not chime well with policy interventions, as small-scale and smart they may
While agreeing that decision-making under conditions of uncertainty is different for
the poor more generally, the protagonists of the behavioural and experimental turn in devel-
opment economics send contradictory signals with regard to the global south. In the introduc-
tion to a paper titled ‘Development economics through the lens of psychology’ Mullainathan
(2005, p. 47) is at pains to argue that the incorporation of cognitive psychology should not be
confused with ‘pejorative attempts to label the poor as “irrational” to blame the poor for
their poverty nor to argue that the poor have specific irrationalities’. Rather than pointing at
inherent personal traits, the explanatory burden for individual behavioural anomalies is laid on
the door of the very context of poverty in the global south.
While Mullainathan himself says very little about what exactly ‘context’ may mean,
there is a tendency in the documents to mobilize classical cultural stereotypes and tropes of
modernization when turning to the external environment. Participants in the debate that are
more closely linked with development practice are particularly outspoken in this regard. The
World Development Report concept note cited above mobilizes ‘mental models rooted in par-
ticular cultures’ (World Bank, 2014). Other documents draw a clear line between modern
market economies in the north and more traditional arrangements in the south. ‘Rationality
violations are less prevalent in an environment that more closely resembles the market-type of
setting that is the basis of neoclassical models’, argues Cecchi (2010, p. 5). And according to
Anderson and Stamoulis (2006, p. 17) it is a lack of exposure to the discipline of the market
that sees to it that ‘behavioural anomalies may be even less anomalous (i.e. they may be much
closer to the norm) than observed in the USA and Europe’ (Anderson & Stamoulis, 2006, p.
While I found this argumentative pattern consistently in the documents analysed, there
are exceptions. An M4P specialist, for instance, sharply criticized the tendency in the field to
assume too easily ‘that the very poor are less connected, less exposed, less engaged, less
equipped, more vulnerable, more abused’ and that they live ‘in a world of weaker positions
and lesser options’ (Bekkers, 2011, p. 12).
‘The poor make safer but less profitable investments’
It is three interrelated behavioural ‘anomalies’ in particular that inform behavioural research
in development economics: hyperbolic discounting, procrastination and loss aversion. Dis-
counting refers to the propensity to value the present higher than the future. In its hyperbolic
variant discounting is time-inconsistent, for instance when trade-offs between the present and
the near future are high, and those between the near and the far future low. This leads to ‘self-
control problems’ (procrastination) (Mullainathan & Thaler, 2001, p. 1096). A slightly differ-
ent, though connected argument turns to loss aversion. This draws on the insight that humans
tend to fear not risk per se but the prospect of loss.
What these behavioural anomalies do according to the documents is that they prevent
people from taking risks. For instance, hyperbolic discounting is connected with the observa-
tion that income earned after selling the harvest is spent right away and/or that decisions to
buy fertilizer or other inputs are shifted to an indeterminate future (Duflo, 2006, p. 372; see
also Anderson & Stamoulis, 2006, p. 11). And it is assumed that loss aversion makes vulnera-
ble farmers very reluctant to change their behaviour and provides incentives to stick to estab-
lished ways of doing things. ‘[The prospect of loss] could explain’, argues Fafchamps (2009,
p. 16), ‘why farmers are not willing to put assets at risk by buying agricultural inputs they are
not guaranteed to recoup’ (see also Fowler & Brand, 2011, p. 1, 4; Gibson, 2006, p. 8; World
Bank, 2010, p. 8).
Loss aversion and impatience are often equated with traditional life-styles and repre-
sented as signs for backwardness and obstacles towards market development. A policy docu-
ment on the maize market in Bangladesh found market players to be ‘especially slow to learn
about new ideas and opportunities’ (Gibson, 2006, p. 9). Traditional institutions are seen as
being ‘insufficient in an era of high intensity farming’, government support is regarded as
ineffective (ibid., pp. 21-23), and collective ownership is represented as a major disincentive
to investment and risk-taking (Ferrand et al., 2004, p. 3). There is again reference to the social
context of decision-making, a key programmatic M4P document pointing at the ‘prevalence
of traditional social norms’ in the agricultural sector (M4P 2008, p. 12), and the authors of a
USAID discussion paper arguing that certain social norms ‘de-value or dis-incentivize wealth
creation’ (Fowler & Brand, 2011, p. 4).
A similar discursive logic is revealed with a view to existing systems of risk manage-
ment. A randomized experiment assessing the effects of the introduction of formal insurance
in rural India, for instance, appears to take the apparent inferiority of informal institutions for
granted (Mobarak & Rosenzweig, 2012, pp. 1, 35). This is a general pattern in the documents
analysed. Existing arrangements are represented as ‘traditional’ and ‘informal’ and are
deemed insufficient to adequately deal with the challenges. All this explains, it is argued, that
the poor tend to make safer but less profitable agricultural investments, having negative im-
plications on the ground: ‘Reluctance to adopt new agricultural technology for fear of risk is
often seen as a key contributor to the persistence of rural poverty’ (Fafchamps 2009, p. 1; see
also Lybbert et al., 2010, p. 182).
In doing so, representations take up long-standing imaginations that inform classical
approaches towards economic development: On the one side are ‘the poor’, reduced to ‘indig-
enous’, ‘local’ and ‘traditional’ knowledge, populating a world characterized by small scale
and traditional agriculture. On the other side we have ‘the non-poor’ trained and educated,
involved in large-scale production using sophisticated farming methods. On the one side are
poor smallholders, on the other entrepreneurial farmers (Ferrand et al., 2004, p. 10). Table 1
provides an example adapted from an M4P toolbox for value chain analysis, financed by
DFID, the UK donor agency. Just as other comparable documents it provides a checklist and
script for practitioners, mapping levels of knowledge and technology for different users in
Cassava production and processing in Vietnam (M4P, 2008, p. 77).
Table 1: Example of knowledge and technology matrix cassava production and pro-
In representations like these ‘the non-poor’ play the role of a benchmark against which ‘the
poor’ are judged. It is possible to connect these arguments with the reception of dual process
theory within behavioural economics more generally. The poor live mainly in system 1, the
cognitive world that is automatic and unconscious. Decisions of the ‘non-poor’ are checked
by rule-based, rational and explicit system 2. By way of exaggeration, habitual behaviour con-
fronts conscious action, or, ‘nature’ contrasts with ‘culture’. It is impossible in this logic to
force people to behave against their (imperfect) nature. This provides a crucial step in the dis-
course. In a situation in which it appears to be economically efficient for the rural poor to
adopt a more entrepreneurial strategy, but in which there are systematic cognitive biases that
prevent them from doing so, there is a need for incentives to change behaviour ‘voluntarily’.
‘Markets can be learnt’
The devaluation of risk-sharing arrangements as being unproductive and the ‘othering’ of
poor smallholders against the mirror-image of more sophisticated farmers prepares the ground
on which more formal, that is market-based solutions are legitimized. Access to land and in-
dividual property rights play a prominent role, policy documents pointing out that ‘farmers
are more likely to invest in their land – and achieve productivity gains when they have se-
cure land rights’ (Swiss Agency for Development and Cooperation, 2008, p. 27).8 Mullaina-
than (2005, p. 59) articulates the question of property rights with the behavioural anomalies
discussed above: ‘Appropriately defining property rights prevents two (or more) parties from
having an endowment effect [i.e. loss aversion] on the same object’.
These quotes illustrate once again that it is the behavioural weakness of the poor that
has to be corrected. Libertarian paternalist interventions turn into means to change behaviour,
being capable of curing the behavioural defects that are ultimately made responsible for pov-
erty and underdevelopment. This can be substantiated further with selected examples from the
analysed texts: Fowler and Brand (2011, p. 3) refer to the need to address ‘underlying root
constraints’ as being ‘fundamental for … behavioural change strategies’; the authors of a GIZ
value chain development guide argue that ‘[i]n order to assert oneself in value chains, there
very often is a need for significant change in behaviour and thinking’ (Barthelmes, 2011, p. 6;
my translation); a programmatic M4P report hints at ‘the new emphasis on nudging’ (Swiss
Agency for Development and Cooperation, 2008, p. 8); and the OECD, in a surprisingly out-
spoken way, concludes that ‘[p]olicy-makers need to manage habits to break or re-establish
them’ (OECD, 2012, p. 45).
Global markets are regarded as a pregiven natural fact in this discourse. At a time
‘when markets like the weather – are just there’ (Ferrand et al., 2004, p. 3) it is the people
who have to change. The market plays an active, positive role in this context. Given that be-
haviour can be expected ‘to be adaptive’ there is hope: ‘market players can “learn” more effi-
cient behaviour’ (Swiss Agency for Development and Cooperation, 2008, p. 8; see also
Fowler & Brand, 2011, p. 5). The market is capable of healing the behavioural deficiencies by
disentangling the rural poor from the bonds of traditional cultural and social conditions and by
enabling them to take the initiative into their own hands (Anderson & Stamoulis, 2006, p. 24).
In all these instances markets are not conceptualized simply as exchange mechanisms, but
rather as machines that shape the preferences of participating actors, stimulating a ‘learning
process’ that reduces ‘rationality violations’, as the author of a report published by the Dutch
Ministry of Foreign Affairs put it (Cecchi, 2010). ‘When placed in the right environment’, the
same author concludes (p. 5), referring to findings by experimental economists, ‘agents tend
to behave according to neoclassical theory’. The discipline of the market is expected to nor-
malize the poor, interventions helping ‘to mainstream the poor, to bring them to the attention
of “normal” market players and to lay the basis for more fundamental change’ (Swiss Agency
for Development and Cooperation, 2008, p. 14).
But ‘market learning’ and ‘mainstreaming of the poor’ do not occur all on their own.
Help is needed, and development economists, caged or in the wild, turn into physicians who –
after diagnosing the problem carefully administer small doses of medicine to treat the pa-
tients. They crucially do so with the support of nudges, experimental designs and games – the
devices of the marketization of anti-poverty policy.
Market devices
Processes of marketization are not only recursively informed by economic knowledge and put
to work by economists, but are also socio-technically distributed. A wide spectrum of market
devices intervenes in the framing of concrete markets and the formatting of exchange mecha-
nisms and evaluation processes. Amongst these is, first, a diverse array of devices that in
one way or the other – are designed to increase the commitment of targeted individuals to
behaviour that is deemed more rational and in their real interest. ‘Commitment devices’ are
often quite simple nudges that induce farmers to change their behaviour, because they signifi-
cantly reduce what is termed the psychological costs of deviating from ‘business as usual’
(Duflo, 2006, p. 374). These nudges often use a combination of IT-based services, media,
mobile phone networks and physical proximity (Ferrand et al., 2004, p. 4). In the case of the
Kenyan fertilizer project briefly summarized above they take on the form of cell-phone text-
message reminders and visits by NGO representatives that remind farmers to do certain
things. In addition to this, Kenyan smallholders are transformed into entrepreneurial financial
subjects that insure themselves against weather risks. A heterogeneous network motivates
these smallholders to calculate and to take risks: solar-driven weather stations, historical
weather records, the Kenyan mobile phone provider Safaricom, the mobile-phone based mon-
ey transfer service M-PESA, and the co-operative Agro-Vet-System providing local outlets
for insurance policies. In rural Ethiopia, sesame farmers are exposed to public electronic tick-
er boards that transmit data from ECX, the Ethiopia Commodity Exchange. And in Bangla-
desh NGOs implemented an M4P papaya value chain project with the help of television ad-
vertisements, billboards and text messages that connect famers with the Jigyasha 7676 agro-
information service (Katalyst, n.d.). Economically more beneficial behaviour is also nudged
in these projects with the help of role models and peer pressure. As social learning is deemed
important in shaping behaviour, market facilitators are advised to take into account how to
leverage social networks (Fowler & Brand, 2011, p. 5).
A second form of market devices concerns the procedural settings provided by behav-
ioural games and experiments that are also often used as socially and spatially enclosed stages
on which nudges can be applied in controlled environments, and learning be monitored more
efficiently. This holds above all for the field experiment that has turned into a popular policy
device in the global south only very recently. While behavioural experiments and games are
also used for evaluation purposes, it is their role as a testing ground for planned policy inter-
ventions that has increased greatly in importance in the recent past (Karlan & Appel, 2011, p.
8). This has increasingly transformed these instruments into key devices to prepare new poli-
cy interventions, for instance, in the context of the introduction of insurance solutions for ag-
ricultural risk management (Johnson, 2013).
Given that the selection bias discussed earlier poses even more challenges when exper-
iments are being conducted ‘in the wild’, the methodological innovation of randomization has
been particularly important. Randomization has become a standard procedure when develop-
ment policy interventions are tested (pilot programs) and evaluated, academic economists
providing templates and practical guidance on ‘how to use such evaluations to answer ques-
tions about economic behaviour’ (Duflo et al., 2008, p. 3898) and to improve program de-
signs. A key advantage of randomization is the enormous cost advantage, which makes it easy
to replicate experiments in different settings. The number of units on which data needs to be
collected can be relatively small, arguably without compromising economists’ preference for
scientific rigor and mathematical reasoning.9 In this vein, randomization provides the frame
that allows behavioural experiments to travel freely across the global south. The underlying
norms are extremely powerful and the authority of development economists to control what
constitutes normal or efficient outcomes is only rarely questioned. This is linked to expecta-
tions that the poor are adaptable and mobile, and internalize the necessity of life-long learn-
ing, acquiring and maintaining skills throughout the course of their working life (Swiss Agen-
cy for Development and Cooperation, 2008, p. 23).
These devices have become active elements in the socio-technical market arrange-
ments that transform smallholders in the global south into more entrepreneurial economic
subjects. They render economic activities calculable, standardize and normalize practices,
generate trust and see to it that traditional ways of doing things are increasingly regarded as
dispensable. At the same time, they generate new uncertainties. Smallholders are forced to
make economic decisions (when to buy, when to sell), and to compete with other members in
the community. They form subjects who are constantly on alert and for whom rational calcu-
lation becomes a daily life routine, legitimating their continuous and recurring use. It is in this
sense that the devices of market-based anti-poverty programs ‘do things’ and produce new
realities. It is also striking that the medical cocktails mixed by the engineers of behavioural
change programs often contain disconcertingly high doses of coercion and force. This is a far
cry from the gentle nudging prescribed in Thaler and Sunstein’s bestselling book, and illus-
trates that behavioural engineering is different if you are considered poor, above all if you
happen to live in the global south.
3. The market subject as a target of behavioural engineering
The marketization of anti-poverty policy is an informative example of how behavioural eco-
nomic thinking reconfigures what economic policy is and does. As I have argued at the be-
ginning of this paper, there are a rising number of policy fields that could be used as case
studies. Accordingly, and the particularities of policy interventions in the global south not-
withstanding, there are more general lessons to be learnt from my case study. In what follows
I briefly elaborate on three broader themes emerging from the discussion above.
From market failure to the failing individual
It is possible to read the marketization of anti-poverty policy as a process that ensures that
economic and social realities are brought into line with the laboratory conditions of the mar-
ket model defined by standard economic theory. The underlying logic of the model, however,
has been adjusted. At least at first sight, it is no longer exclusively the mechanistic model of
neoclassical economics that is called upon. At a more careful look, however, the gap between
both perspectives is not nearly as wide as we are made to believe. Protagonists of behaviour-
ism in development economics continue to conceptualize the poor as means-ends oriented,
weakening the assumption that they are all-knowing and perfect calculators only to some ex-
tent (Anand & Lea, 2011, p. 284).
Displacing the market with the individual subject as target of policy interventions may
therefore scratch the positive surface of the neoclassical project, but it strengthens its more
far-reaching normative aspirations. In so doing the emerging new orthodoxy actually provides
a means to stabilize the neoclassical project during turbulent times, translating it into a utopi-
an yardstick to measure concrete economic behaviour and as a behavioural norm performing
economic realities. In what amounts to a strange trade-off between individual behaviour and
social institutions, the unregulated market is considered as pregiven and individual behaviour
as being in need of adaptation (Frerichs, 2011, p. 308).
From smallholder to entrepreneurial farmer
In the context of market-oriented development, behaviourist and experimentalist thought is
also linked to geographical imaginations that connect backwardness and marginality with
market failure. What the documents analysed above do, seconded by the protagonists of be-
havioural development economics, is, first, to problematize individual behaviour as the main
cause of poverty and underdevelopment and, second, to transform this problem into an oppor-
tunity for all sorts of behavioural engineers and their paternalist programs (see Roy, 2010, p.
23). The behavioural and experimental turn in development is driven by a desire to transform
poor risk-averse smallholders, trapped in traditional agricultural practices, into ‘responsibil-
ized’ entrepreneurial farmers who readily take risks and never shy away from adopting the
latest technology (Sheppard & Leitner, 2010, p. 190).
By positing ‘risk aversion’ as a universal character trait of smallholders, heterogene-
ous economic practices are reduced to a single explanatory variable (Watts, 2013, p. 16). In so
doing, the underdeveloped, poor subject is represented in opposition to a norm that continues
to be defined by the rational subject of standard economic theory. In order for this representa-
tion to work there has to be a strict distinction between a traditional self-sufficient world of
subsistence and a dynamic modern realm of market exchange. Their deep and necessary en-
tanglement notwithstanding, the construction and subsequent reproduction of ‘two apparently
contradictory but unspecified production systems’ (ibid., p. 15) and the deeply asymmetric
way these two systems are valued provides the ground on which the practitioners of behav-
ioural engineering apply their paternalist therapies to the behavioural ills afflicting the rural
This is not to say that the script of behavioural programming is inscribed on docile
peasant bodies, passively performing the subjectivities it is naming. Nudging and experiment-
ing are never complete and always prone to failure. They may be readily adopted, they may
meet outright resistance, and there may be instances of what James Scott has termed calcu-
lated conformity’ (Scott, 1985). These are important questions, however, that can only be an-
swered empirically and go beyond the scope of this paper.
Rendering development technical
All this prepares the ground for a radical decontextualization of the issues at hand, thereby
rendering development technical, that is, ‘extracting from the messiness of the social world,
with all the processes that run though it, a set of relations that can be formulated as a diagram
in which problem (a) plus intervention (b) will produce (c), a beneficial result’ (Li, 2007, p.
265). Wider societal issues are translated into technical problems that can be corrected with
the help of behavioural engineering and experimentalism. This is a position that is disconcert-
ingly close to the mechanistic fantasies of conditioned learning popularized by earlier behav-
ioural thinkers such as Burrhus Frederic Skinner.
Policy practitioners and academic economists take issue with the tendency of both
market-fundamentalist and state interventionist approaches to focus on the ‘big questions’. It
is against this that the seemingly less ambitious, micro-level and technocratic approach ac-
quires its legitimization (Banerjee & Duflo, 2011, pp. 3, 9). In so doing, the protagonists of
market-driven anti-poverty programs take part in the emergence of a politics of ‘forced
choice’ that erases any notion of the wider spatial and social contexts of decision-making. In
the context of development programs that connect people and places to global markets and
value chains, this concerns the relative position in networks of production, distribution and
consumption. It is obvious that some person’s or group’s articulation with global markets may
be another’s disarticulation and marginalization. This starts with the carefully constructed
settings in which the nudges of behavioural engineering acquire their particular force, or with
randomized experiments arbitrarily separating those who are treated from those who are not.
And it ends with the caprices of global value chains and markets, in one moment providing
opportunities of linking and upgrading, in other moments unceremoniously severing ties with
consumers in the global north or in the urban centres of the global south.
This is a reminder that markets and market subjects have to be actively produced in a
highly selective process in which ‘market forces are imposed on some but not others’ (Hall et
al., 2013, p.14) and that marketization constitutes individualized rational actors against a
backdrop of collective failure. In my example failure is associated with ‘the poor smallhold-
er’, but in different policy contexts this role may be played by other groups, for instance, sin-
gle parents’ or ‘welfare recipients’. It is crucial therefore to look carefully how these process-
es interact with registers of social difference, such as gender, ethnicity or class.
Concluding remarks
Economic behaviourism has made an impressive career during the last decades, at first mov-
ing from a marginal position at the crossroads of psychology and economics into the econom-
ic mainstream and more recently transforming into a powerful policy script. In the preceding
discussion I illustrated this journey on the example of the recent rise to prominence of behav-
ioural thinking in the realm of development policy. Using the case of anti-poverty policy in
rural regions of the global south as an example, I argued that there is a reorientation with re-
gard to the target of market-oriented development interventions. The diagnosis is behavioural,
not market failure, and the treatment prescribed is only thinly veiled behavioural engineering
under the label of what has been termed somewhat awkwardly ‘asymmetrical’ or ‘libertarian
paternalism’. It is the combined work of nudges and procedural settings that mobilize ‘south-
ern’ marketized selves, allowing them to be integrated into global commodity circuits.
I could have done similar analyses in other policy fields. Behaviourist and experimen-
talist insights inform political attempts to deal with climate change and the management of
environmental risks more generally, they underlie the formulation of interventions under the
programmatic label of smart cities and smart regions, and they provide the blueprint for all
sorts of interventions in the context of welfare state restructuring. The behavioural project
appears to be well positioned at a time when social policies are represented as demanding but
also compassionate, private enterprises appear to be increasingly sensitive towards and make
profitable use of social and ‘cultural’ difference, and capitalism is ostensibly getting greener
and socially more responsible.
The material presented in the paper demonstrates that the representations of behav-
ioural interventions as ‘smart’, sensitive to context and ‘more humane’ hide from view that
there is a great deal of coercion and force involved. At the same time, one should not exag-
gerate the power of behaviourist and experimental policy interventions more generally. Alt-
hough they may represent the world as a knowable machine, which can be measured, mod-
elled and quantified, the choice architects and libertarian paternalists can neither escape the
contradictions when their policy framework touches ground nor the fact that other actors
might use these contradictions to advance their own agenda.
The exact way in which the marketization of development is being played out on the
ground is an empirical matter. That there is a need for more empirical research is supported by
the fact that the World Bank has chosen to prepare the 2015 World Development Report un-
der the theme ‘Mind, Society and Behaviour’. It is therefore highly unlikely that this trend is
about to disappear soon, and this not only with a view to rural settings, which constitutes the
focus of this paper.
1 Although I am highly sceptical of the unceremonious translation of behavioural thinking into the policy
realm, I do not write my paper from a mechanical opposition to concrete policy interventions be they informed
by behaviourism or by market-thinking more generally.
2 With regard to alternatives, one could think of classical, unconditional aid, the continuing role being played
by developmental states of different stripes, or policies that regard high productivity, commercialized agriculture
based on larger farms as a better way forward (see Collier & Dercon, 2014). I thank an anonymous referee for
alerting me to make this point clearer.
3 Jointly with Kahneman the Nobel Committee decided to honour the experimental economist Vernon L.
Smith. This is another indicator for the entanglement of cognitive psychologist research with experimental meth-
ods and game theory that did a lot to buttress behavioural economics’ ascent into the discipline of economics.
4 The book has inspired a rising number of popular academic books by psychologists and behavioural econo-
mists (e.g. Kahneman, 2011; Mullainathan & Shafir, 2013).
5 Key figures in the debate include academic scholars whose activities cluster around the Abdul Latif Jameel
Poverty Action Lab at MIT to various degrees: Esther Duflo and Abhijit Banerjee, both at MIT, Sendhil Mul-
lainathan, Havard University, and Dean Karlan, Yale University. These scholars combine conceptual work with
development practice and have enlisted a wide array of researchers in the global north and the global south.
There are also institutions in the global south that promote behaviourism in development directly. A case in point
is the Research Unit in Behavioural Economics and Neuroeconomics (RUBEN) at the University of Cape Town,
South Africa.
6 Market-oriented interventions have of course a longer history in development and have been challenged by
proponents of ‘rural development’ for the neglect of wider social and political considerations and its technocratic
style (Hariss, 1982, p. 17). What gives the processes discussed in my paper a particular quality is that they are
part of a more general mobilization of the poor as market actors in the context of representations of a gentler,
more ethical capitalism (Roy, 2010).
7 I am aware of the fact that I am dealing with a heterogeneous body of texts. Behaviourism has not been taken
up to the same extent by all organizations providing the sources for the policy documents analysed in this paper.
There are other narratives in addition to the discourse analysed in this paper, often emerging from the same or-
ganization. As it is my explicit aim to reconstruct the translation of behavioural thinking into market-based anti-
poverty programs, the focus on this narrative is justified. However, I will acknowledge deviating positions when
8 There is routine reference to Hernando de Soto’s Urban Property Rights Project in Peru and subsequent prop-
erty titling programs in the global south, proof that policy templates do not necessarily travel successfully be-
cause they work, but also because they establish a reality of their own (Mitchell, 2005).
9 The growing influence of the ‘randomistas’ in development economics has not been left uncommented. Criti-
cal voices include key figures in the development industry, such as the World Bank. This illustrates the extent to
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Comments and criticisms of many colleagues have helped me to revise and rewrite various
versions of this article. In particular, I would like to thank Marc Boeckler, Urs Geiser, Isabelle
Guérin, Leigh Johnson, Solène Morvant-Roux, Marion Werner and two anonymous referees.
Christian Berndt is a Professor of Economic Geography at the University of Zurich, Swit-
zerland. He obtained his PhD from Cambridge University and his Habilitation from the Uni-
versity of Eichstaett-Ingolstadt. His early research concerned regional restructuring and labour
relations in Germany. He has since focused empirically on the industrialization of the north-
ern Mexican border with special emphasis on Ciudad Juárez and the way ‘southern labour’ is
transformed. Theoretically he is involved in attempts to introduce a spatial perspective to the
interdisciplinary social studies of economization. Labelled ‘geographies of marketization’ and
developed jointly with Marc Boeckler, the focus is on the market as the ideal site of rational
decision-making and on political attempts to align our socio-spatial realities with this utopian
Table 1: Example of knowledge and technology matrix – cassava production and processing
knowledge on
upland grow-
ing conditions
Local varieties
knowledge on
chip making
and drying
from extension
Hybrid varie-
ties from Chi-
from formal
Source: M4P, 2008, p. 77.
... However, according to Shogren et al. (1994), common knowledge about each bidders rationality, beliefs and strategies is one of the least plausible presumptions in experimental auctions. Neoclassical economic theory has been subject to a stream of criticism for example from behavioural, evolutionary economics and game theory (Mueller, 2004;Etzioni, 2010;Berndt, 2015;Mendola, 2007). This has resulted in alternative approaches to understand decision-making. ...
... overlapping and it seems blurry to which school of economic thought they exactly belong (Berndt, 2015); discussing this is beyond the scope of this paper. Instead, we reflect on three common approaches which we deem relevant in for our case study and that relate to: 1) non-standard believes; 2) non-standard decision making; and 3) nonstandard preferences (DellaVigna, 2009). ...
... Thus, the quantification of seed quality and seed systems is a requirement for rational, calculative, and maximizing behaviour. This further suggests that irrational or suboptimal behaviour can be 'cured' and that optimal behaviour can be learned when people are set in the right environment (Berndt, 2015). Instead of reforming behavioural theory to match reality, the right conditions are identified in which the desired theory works (Guala, 2007). ...
... Kouame and Komenan, 2012;Eling et al., 2014;Stein, 2016;Platteau et al. 2017) and a growing emphasis on the promotion and marketing of microinsurance to potential clients, especially through efforts at promoting insurance 'literacy' (Cole, 2015;Fonseca, 2016). Efforts to engineer demand through behavioural interventions of course speak to a wider tendency in neoliberal development interventions towards 'nudging' (see Berndt, 2015). Alongside behavioural nudges, though, there have also been protracted efforts to develop the infrastructural bases for profitable microinsurance operations. ...
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This article traces experiments aimed at promoting wider adoption of ‘microinsurance’ – small, simplified insurance policies targeting the poorest. Microinsurance is a central element of a wider turn towards the promotion of ‘resilience’ in global development. The development of commercial markets for microinsurance, however, has failed to meet the expectations of promoters. This article traces the ways that the diverse donor agencies, professional organizations and philanthropic organizations involved in the promotion of microinsurance have responded to these failures, primarily by seeking to articulate basic data infrastructures that might make possible profitable insurance operations. These activities are described as a kind of ‘anticipatory marketization’ – experiments seeking to prepare the ground for the emergence of markets for risk management, thus far without much success. Where microinsurance has often been described in terms of ‘financialization’, this article suggests that there are important political dynamics at play that have been overlooked. Efforts to develop markets for microinsurance, and the persistent focus on troubleshooting and re-engineering those markets in the face of failure, are not driven directly by finance capital. Rather, they reflect fraught efforts to articulate modes of social protection not requiring substantial redistribution.
... For this mindset, the poor share with everyone else the same behavioral flaws and cognitive biases; amplified by poverty, however, these become counterproductive, 11 perpetuate poverty, and call for correctives (Mani et al. 2013). While studying the links between poverty and mental states to improve banking and saving behavior among the poor may deserve merit, the assumption that fixing the irrational behavior of poor people suffices to address poverty without engaging with its structural determinants remains at best a utopian option (Berndt 2015;Whitehead et al. 2018). Perceiving decision-making deficiencies as obstacles to development and poverty mitigation, the behaviorally informed policy advocated by the World Bank's 2015 World Development Report decontextualizes poverty and fails to address the structural factors that make it inescapable; it favors minor repairs to existing structures and choice contexts that nudge poor people to learn to live with deprivation (Fine et al. 2016: 13−14). ...
Abstract In light of Thomas Kuhn’s view that paradigm change requires the existence of an alternative paradigm, this inquiry examines whether behavioral economics provides a foundation for change in economics. Drawing on Kuhn’s account of normal science that integrates science as a social system and a system of ideas, it critically examines the institutional and conceptual standing of behavioral economics relative to the mainstream paradigm and the alternative proposed by radical political economics with a view to assess the extent and the quality of change behavioral economics can impart to the dominant tradition of normal science in economics. Keywords paradigm change, behavioral economics, scientific community, mainstream paradigm, radical economics A14, B0, B4, B5
In the rural department of lower North-West Haiti, the inhabitants constantly talk about the problem of grangou (hunger): Evoking the image of an agricultural area that no longer produces anything, the farmers say they suffer all kinds of shortages and can no longer make a living. Hunger appears as a general and indeterminate expression of “nothing working”. Through forms of collective organisation, the inhabitants try to make the situation intelligible and tangible, to be able to act on it. This is what we call, inspired by the ideas of John Dewey, a process of reconstruction of experience. The NGOs present in the department could prove to be a lever in this process. However, while the perspectives of the NGOs do not differ significantly from those of the peasants on the problematic nature of the situation, the shortcomings that characterise it, or the ends to be pursued, they do diverge with respect to the meaning of action and agency of the inhabitants. Here we seek to show that the behaviourist conception of action promoted by NGOs is a “background of intelligibility” that implicitly constrains their way of perceiving situations, leading them to disqualify farmers’ actions, to deny their agency – both practical and normative – and finally to deprive them of the means necessary for the reconstruction of a public experience.
Dominated by conflict, Turkey’s Kurdish question has transformed over time, opening up new areas of inquiry. Under the Democratic Autonomy project, ongoing since the mid-2000s, Turkey’s Kurdish Movement has promoted cooperatives and communes – a post-capitalist marketization project – in Northern Kurdistan. Drawing upon economization studies and diverse and community economies studies’ engagement with assemblage thinking, this paper scrutinizes the retailers’ cooperative model the Movement experimented with and explains the practices linked to post-capitalist marketization: creating inclusive platforms for debate, incorporating ordinary actors as experts, and upscaling post-capitalist marketization through building relations with other cooperatives.
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A lot has changed in the global machine of international development since its inception, but the language of technological acceleration remains ubiquitous today. In this paper, I trace one of the lineages of this new acceleration in the post-dotcom boom Silicon Valley. Informed by the technophilic culture of what Richard Barbrook and the late Andy Cameron described as Californian ideology, technological acceleration offers both a language and a model for antipoverty experiments hinging on the elusive market subject of the African entrepreneur. Drawing on the writings of three Silicon Valley evangelists who have produced a written culture of what I call poetics of acceleration, and on four years of ethnographic research in Cape Town, this paper charts the frictional interfaces between technocapitalism and African development, suggesting that these frictions, while vital in the production of new profit frontiers, are also the site of more ambivalent engagements with in-between futures that perhaps outstrip the predictable ends of these entrepreneurial market experiments.
Geographers have interpreted the rise of weather insurance for small agricultural producers as emblematic of financialization’s inexorable march to capitalize the countryside. Yet this market has proved far less successful than advocates hoped or critics feared. Rather than a speculative tool for surplus extraction from smallholders or a mechanism for their financial subjectification, this article reinterprets weather insurance as an infrastructure of concessionary transfers from the development sector to make market-mediated mechanisms work. These transfers are emblematic of the new distributional terms struck between donors, states, and insurance capital as financial risk transfer is articulated with the extension of fragmentary safety nets. Economic field experiments with insurance have proliferated as venues in which the value of insurance is tested by both economists and experimenting subjects. Just as data from these trials have suggested some positive welfare impacts, they have also indicated target clients are unwilling or unable to pay full market price, thus performing a new justification for the perpetual presence of subsidies. Such transfers present opportunities for reinsurers to command rents through their control of large pools of capital and their interpretive authority over techniques for pricing risk under uncertainty. In a changing climate, reinsurers are poised to collect larger rents from donors’ and governments’ premium subsidies meant to decrease insurance costs for the vulnerable. These dynamics of rent cycling underscore the urgency of building more equitable, systematic risk-sharing infrastructures to replace the current fragmentary archipelagos of weather insurance.
This paper is a practical guide (a toolkit) for researchers, students and practitioners wishing to introduce randomization as part of a research design in the field. It first covers the rationale for the use of randomization, as a solution to selection bias and a partial solution to publication biases. Second, it discusses various ways in which randomization can be practically introduced in a field setting. Third, it discusses design issues such as sample size requirements, stratification, level of randomization and data collection methods. Fourth, it discusses how to analyze data from randomized evaluations when there are departures from the basic framework. It reviews in particular how to handle imperfect compliance and externalities. Finally, it discusses some of the issues involved in drawing general conclusions from randomized evaluations, including the necessary use of theory as a guide when designing evaluations and interpreting results.
Conference Paper
Regulation by the state can take a variety of forms. Some regulations are aimed entirely at redistribution, such as when we tax the rich and give to the poor. Other regulations seek to counteract externalities by restricting behavior in a way that imposes harm on an individual basis but yields net societal benefits. A good example is taxation to fund public goods such as roads. In such situations, an individual would be better off if she alone were exempt from the tax; she benefits when everyone (including herself) must pay the tax.
This study examines the broad range of factors driving farm management decisions that can improve the environment, including drawing on the experiences of OECD countries. It identifies policy options that would contribute to a sustainable and resilient agricultural sector in the context of climate change.
Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
For economic development to succeed in Africa in the next 50 years, African agriculture will have to change beyond recognition. Production will have to have increased massively, but also labor productivity, requiring a vast reduction in the proportion of the population engaged in agriculture and a large move out of rural areas. The paper questions how this can be squared with a continuing commitment to smallholder agriculture as the main route for growth in African agriculture and for poverty reduction. We question the evidence base for an exclusive focus on smallholders, and argue for a much more open-minded approach to different modes of production. To allow alternative modes and scale of production to emerge, new institutional and policy frameworks are required. A rush to establish “mega-farms” with government discretionary allocation of vast tracts of land is unlikely to be the answer. Allowing a more dynamic agriculture to develop will require clear institutional frameworks, and not just a narrow focus on smallholders.