Comment on "Development Economics through the Lens of Psychology" by Sendhil Mullainathan

Abstract

Sendhil Mullainathan's paper does a terrific job of acquainting the reader with concepts in behavioral economics. Sendhil is one of the young wizards pioneering behavioral economics in two directions (which those of us working in behavioral economics since the 1980s have been hoping would emerge for years)-formalizing psychology mathematically in a way that makes it directly useful in economic theory, and searching for applications in field data (see Camerer and Loewenstein 2003 for a recent review). Sendhil has laid out the central questions clearly and thoroughly, so my discussion will focus on two topics that go beyond his essay: 1. Other concepts in psychology that can be used to think about development, particularly attribution theory and mental modeling. 2. The prospect for simple experiments that can tell us something about development, illustrated with two examples: a remarkable cross-cultural coordinated field experiment, and a laboratory experiment on simple capital Investment economies with poverty traps.

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