Beyond Winners and Losers: What Can Behavioral Science Teach Us About the Puzzles of Economic Reform?

The Rohatyn Center for Global Affairs program on Power, Wealth and Global Political Economy presents “Beyond Winners and Losers: What Can Behavioral Science Teach Us About the Puzzles of Economic Reform?” with Oscar Calvo-Gonzalez, Acting Director-General, Evaluation, World Bank Group

Why do some countries undertake economic reforms while others delay the adoption of economic reforms that on aggregate are beneficial to their populations? And why do many governments end up backtracking after they launch reforms? Answers to these questions largely rely on political economy explanations. Identifying winners and losers from the reform, so that one can rally the would-be winners and somehow compensate the would-be losers follow as logical solutions to the puzzle of why beneficial reforms are delayed. While these frameworks are helpful to think through the nature of the puzzle, in practice they provide only limited insights. Drawing on several economic reform episodes, and especially on a case study of a fuel subsidy reform, this talk will show that several additional factors beyond a narrow focus on winners and losers play a significant role in the adoption or not of reforms and, especially, in backtracking decisions. The reform “as experienced” by the cross-section of the population may be quite different from what the analysis of winners and losers may suggest. In an effort to complement the insights from political economy analysis this seminar draws on basic concepts from behavioral science to both help think about factors that need to be taken into account and practical solutions for policymakers.

In person event. For more information visit the Rohatyn Center for Global Affairs.