1. Kami Richmond Economics of Development April 28, 2017
Nudging Cambodia: Behavioral Insights Applicability in Rural Development
Kami Richmond
Economics of Development
April 28, 2017

2. Rural Development in Southeast Asia
“Year Zero”
(1974)

3. “Year Zero” 24.57% growth in rural population Nearly 2 million deaths
Genocide- hundreds of thousands of educated middle class

4. Is Rural Development a Government Priority?

5. Government’s Neglectfulness of Rural Development
Implications:
Depend on donor financing for most new investment projects with more than 30% of the government budget comes from donor assistance.
Negatively impacts the service delivery to the rural poor

6. Trends in Rural Development
Predominately rural subsistence economy
Main crop: rice
70% of real GDP is derived from the rural economy
81% of labor supply is in rural employment

7. Employment Breakdown

8. Labor Supply and Labor Requirement
Labor shortage is partly a ramification of “Year Zero”

9. Implications of Labor Shortage
Need for agricultural mechanization
Economies of scale
Market for economies
Development of agro-industry

10. Why Don’t Rural Communities Demand More Opportunities?
Behavioral Insight:
“Land is not only their safety net, but also the centre of their social, cultural, and political life.”
~Karl Polanyi

11. Behavioral Insights: The Great Transformation
Peasant Societies
Western Societies
Economic behavior: Social relationships, cultural values, moral concerns, politics, religion, or fear instilled by authoritarian leadership
Influencer of behavior: Reciprocity
Economic behavior: Individual choice, based on the logic of rational action and opportunity costs
Influencer of behavior: Profits

12. Applicability to Rural Cambodia
Seek paid employment
Find replacement labor during harvest?
Afford to pay laborer in place of family member?
Can family member return to assist with harvest?

13. Applicability to Rural Cambodia
Land
Heritage
Political
Cultural
Community and neighbors

14. Behavioral Insights
Sending a household member into paid employment, especially non-agricultural work away from home, is heavily dependent on the potential effect it could have on the household’s subsistence activities.
Farmers will adapt their livelihood strategies and find non-agricultural work to keep safe their only source of security, not to transition to the capitalist sector.
Only when there is a strong and proven public social security system in place will the strong bond between rural households and land gradually loosen.

15. Converting Behavioral Insights into Behavioral Design
Source: Center for Global Development

16. 7 Behavioral Design Principles
Facilitate Self-Control by Employing Commitment Devices
Reduce the Need for Self-Control
Remove Snags to Choosing
Use Micro-Incentives
Reduce Inattention: Reminders and Implementation Intentions
Maximize the Impact of Messaging: Framing Effects, Social Comparisons, Norms
Frame Message to Match Mental Model
Source: Center for Global Development

17. Recommendations: Using Behavioral Design to Address Labor Shortage
Campaign boasting percent of rural farmers using fertilizer and other agricultural innovations
Emphasizing loss from not using (more effective than listing gain)
Either a government or NGO-sponsored partnership that builds on reciprocity principle to form a pooled labor system between families to cover the missing labor of a “rotating migrant worker” similar to a ROSCA
Government offer micro-incentive for using new agricultural products

18. Recommendations: Using Behavioral Design to Address Labor Shortage
Establish commitment savings accounts
Send bi-weekly text messages with goal specific savings reminder
Source: Center for Global Development