Behavioural Development Economics

Module description

Behavioural economics applies psychological insights into human behaviour to investigate how people make economic decisions under various conditions of constraint (e.g. time and knowledge) and influence (e.g. social pressure). The module requires basic knowledge of undergraduate microeconomics. It will keep neoclassical theory as a benchmark; while discussing deviations from it in development economics related but not limited to labour economics, firms, and health economics.  It will explore psychological characteristics that affect economic choices and outcomes, with a focus on how they affect poor people's choices in low- and middle- income countries.

Internationalisation 

This module covers economics from an empirical and policy point of view and incorporates many examples from studies on behaviours of people from across low- and middle- income countries.

Sustainability

All of the resources for this module are available on the ELE (Exeter learning Environment). 

Employability

This module equips students with logical thinking, questioning of core economic assumptions and presentation skills, as well as an insight into the behaviours of people living in poverty. This will be helpful in making students think like economists, a skill valued by employers. In particular, it will help students in securing jobs related to policy making and in development consultancies.

External Engagement

You are encouraged to attend the open lectures from visiting speakers in the Business School.

Full module specification

Module aims

The module focuses on microeconomics issues, building on undergraduate microeconomics. We will discuss how microeconomic theories have been adapted to help explain some key behaviours in existing empirical evidence from people making decisions in the real world conditions of scarcity. The module is designed to equip the students with knowledge of key behavioural economics principles, to build their skills to pose and solve questions related to design of effective policies by looking at concrete examples of applications. It will enable the students to question the standard theoretical microeconomic assumptions, a knowledge base that is instrumental to the design of effective anti-poverty policies. The students will expand their learning both through an expansion of theoretical microeconomics knowledge and practical application of this in various context such as in decisions related to health, labour supply, savings, technology adoption, and firms.

ILO: Module-specific skills

• 1. Able to explain and analyse the methodological and empirical work in behavioural economics and their application to low- and middle- income countries.
• 2. Able to read and effectively critique academic papers with a view to designing your own experiments and policies

ILO: Discipline-specific skills

• 3. Demonstrate knowledge of how human behaviour differs from standard economic assumptions especially for those living in poverty;
• 4. Demonstrate ability to adapt or develop theories to account for empirical evidence

ILO: Personal and key skills

• 5. Demonstrate the capacity for analytical thought and reasoned discussion;
• 6. Demonstrate skills to present effectively and independently

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Where you have been referred/deferred for the exam, you will have the opportunity to take a second exam in the August/September re-assessment period. This will constitute 100% of the module.

Syllabus plan

Subject to adjustments to accommodate pacing and student interest

• Non-standard preferences
• Time preferences (present bias, discount factor)
• Risk preferences (risk aversion, loss aversion)
• Norms and social preferences
• Non-standard decision making
• Mental models (aspirations, beliefs, defaults effects)
• Mental bandwidth (limited attention)
• Non-cognitive skills
• Mental health (psychology of poverty)

Indicative learning resources - Basic reading

• Kremer, M., Rao, G., & Schilbach, F. (2019). Behavioral development economics. In Handbook of Behavioral Economics: Applications and Foundations 1 (Vol. 2, pp. 345-458). North-Holland.
• Fehr, E. and Schmidt, K. M. (2006). The economics of fairness, reciprocity and altruism-experimental evidence and new theories. Handbook of the Economics of Giving, Altruism and Reciprocity, 1:615-691.
• World Bank (2015). World Development Report 2015: Mind, Society, and Behavior. World Bank, Washington, D.C
• Ashraf, N., Camerer, C. F., & Loewenstein, G. (2005). Adam Smith, behavioral economist. Journal of Economic Perspectives, 19(3), 131-145.

There is no one textbook for this course. The lectures will also draw on a series of academic journal articles, all of which will be accessible to the students online.

Readings and materials to be linked via the ELE

Module has an active ELE page?

Yes

Origin date

01/04/2021

Last revision date

17/06/2021