In the early 2000s, the Research Department of the IDB embarked on a deep exploration of policymaking in Latin America. What made countries in the region veer from state-controlled to market-centered policies? Why did they fail to reach their development goals and why did international aid assistance often come up short in helping them? The answer to those questions lay in the … [Read more...] about A Fresh Look at Policymaking in Latin America
What are the best ways to get people to change their behavior for their own, and society’s, good? Seeking to avoid coercion, policymakers increasingly turn to pricing strategies, like "sin taxes" on alcohol or cigarettes. Or they resort to techniques from behavioral economics like "nudges," which employ peer pressure, moral appeals and suggestive images—such as pictures of … [Read more...] about A Simple Nudge is a Better Nudge
Residents of Hamburg, Germany may have been shocked by the violent protests that erupted July 6 and July 7 during the meeting of the G-20, as protesters armed with rocks and incendiary devices blockaded streets, set cars ablaze and battled with police officers. But for the inhabitants of many Latin American cities, such scenes are commonplace. They are common because ordinary … [Read more...] about Weak Institutions, Fiery Protests
When the clock strikes midnight on December 31, it's very common to start going over one's New Year's resolutions, like doing more exercise, eating healthier food or giving up bad habits. And it's equally common to forget those resolutions only a couple weeks later. For that reason, sometimes an incentive needs to be added to the good will. Prizes that reward positive changes … [Read more...] about Rewards Help Tax Payments Become "Contagious"
Government capacity is in part the ability to hit the long ball, to have long-term policies that look beyond the next election and the next change in administration. In economic policy, as in social policy and so many other areas, it can make all the difference. Unfortunately, in too many countries of Latin America and the Caribbean winning the next election and installing … [Read more...] about When Government Capacity Creates Economic Options