Psychology and Development: Applications from Cognitive and Social Psychology

Emily Breza and Supreet Kaur

No 34753, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We outline a research agenda for behavioral development economics that seeks to understand the role of psychological channels in: (i) impeding individuals' ability to climb out of poverty, and (ii) shaping the organization of production, functioning of markets, and role of informal institutions in developing countries. We apply a missing markets lens to rationalize why tools, products and services that help individuals overcome their biases will be under-supplied by the market and why behavioral biases can have large impacts in steady state, even among highly experienced agents. We argue that these biases are especially likely to matter for the field of development because core features of poverty---proximity to subsistence, high volatility, market failures, weak formal institutions, and reliance on social ties---amplify the impact of psychological constraints. We organize our review around a core set of psychological constructs: self-control, cognitive constraints, self-beliefs, mental health, and social norms. For each construct, we highlight places where there is only a proof of concept versus evidence of meaningful impacts, and the resultant implications for future research. We also highlight where social capital can be deployed to mitigate the impacts of missing markets. The field research to date has only begun to scratch the surface in document how psychological mechanisms affect behavior and decision-making, and substantial scope remains for future work to determine whether these constraints play a first-order role in shaping poverty.

JEL-codes: D03 I3 O1 (search for similar items in EconPapers)
Date: 2026-01
New Economics Papers: this item is included in nep-evo and nep-neu
Note: DEV EH LS
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34753.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34753

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34753
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().