Entries in economics (15)


Weekly Content Briefing, December 23rd

Each week we are scanning the horizon for interesting content on topics we like that we will post for your reading pleasure. These may be items that we agree with, or not, on issues that touch in some way on what we are working on in our labs. We hope you enjoy them, and that they provoke discussion and additional thought.

The full briefing, with abstracts and links to original sources, is available here.



  • Western world should have looked to fiscal policy, rather than QE measures to fix economy: Richard Koo, Economist

  • Despite global pact to enforce climate control, opposing forces remain

  • Creating a culture of agility helps companies prepare for disruption


  • Understanding, adapting to customers in the digital era

  • Using translators to bridge strategy with analytics to get the most out of big data


Economics of obesity

The McKinsey Global institute has published an economic analysis of obesity worldwide. We appreciate this analysis, because in an addition to the immediate health and wellness issues associated with being overweight, there are significant economic costs, and we believe this should be part of the larger discussion regarding mutuality.

As a recent Economist article on malnutrition points out, there is a relationship between current trends in obesity and malnutrition. As undernourishment has fallen, the number of people eating too many calories has risen correspondingly, meaning that many developing countries suffer all three manifestations of malnutrition - undernourishment, micronutrient deficiency and obesity - simultaneously. According to the first Global Nutrition Report, published earlier this month by the International Food Policy Research Institute, every country except China and South Korea has a public-health problem with at least one of child stunting, anemia among women of reproductive age and excessive weight among adults.

More than 2.1 billion people—nearly 30 percent of the global population—are overweight or obese." -- MGI Report

The key findings of the McKinsey report suggest that comprehensive inervention is needed on a global scale.

    1. Any single intervention is likely to have only a small overall impact on its own. A systemic, large-scale, sustained response, is required to address the burden.
    2. Education and personal responsibility are important, but not sufficient in themselves to reduce reduce obesity.

    3. No individual sectors in society, from the public sector to private business, the media to health systems, can address obesity on their own.

    4. Developing and deploying an anti-obesity program won't be easy, but there are three essential elements: A. launch as many interventions at scale, in as many sectors, as possible; B. look for alignment of incentives and ways to build cooperations; and C. prioritizing these elements should be a secondary concern to avoid constraining constructive action.
    5. Don't let the perfect be the enemy of the good: experimentation on a wide scale can be more important than clinical and behavioral evidence in these early stages.

Do you agree? Share your thoughts here.

Image source: McKinsey Global Institute


Behavioral economics serves as centerpiece of World Bank report, demonstrates potential

Much of the insight available on behavioral economics comes from studies of "privileged folk," but the findings apply with greater force to the poor, according to The Economist. Behavioural economics has profound implications for development, and the discipline is considered in the World Bank's "World Development Report." The report shows the poor are more likely than other people to make bad economic decisions, not stemming from irrational or foolish behavior, but because of circumstances.

The poor are more likely to lack the basic information needed to make good choices, such as which fertilizer to use or when to apply it, and they are more likely to live in societies that hold mistaken or harmful views, such as that girls should not go to school. While conventional thinking assumes the poor will want to earn their way out of poverty, studies from countries as different as Ethiopia and France show that poverty makes people feel powerless and dulls their aspirations so they might not try to escape poverty. Stress presents further challenges for the poor, as does the lack of institutional frameworks of education and pension systems that are present in the West.

While traditional development programs stress resources and markets, a behavioral approach to development is different. Instead of focusing on giving resources and developing markets, it focuses on how decisions are made and how they can be improved. Subtle shifts, like changing the timing of payment for a conditional-cash transfer program in Bagota to just before the start of the school year, or programming that taught Jamaican mothers to play with chronically malnourished toddlers (with no other invigilation), saw significant impacts: school enrollments were up sharply, and twenty years after the play program, the average earnings of these children (among the most deprived in the country) were higher than those of children who had not been malnourished, and far higher than malnourished children who were not part of the program.

The Poverty Action Lab at the Massachusetts Institute of Technology has championed randomized control trials to test tweaks to policy, and with this serving as the central issue for the World Bank's main publication, the Bank has brought behavioural economics into the mainstream of development.

Image source: The Economist

Related News:
Live poor, die young - The Economist


Developing apps with mutuality

I came across this article regarding the experience and unexpected challenges of building apps for low income Americans, written by a developer from Significance Labs. Significance Labs makes "middle of the diamond" products for developed world, and I found many points from her experience that are relevant to the work we are doing at the Mutuality Lab. Key takeaways include:

  • The challenges faced by low income communities in the developed world can be very similar to that of the low income communities in developing world -- "Living on a low income translates into other forms of scarcity: of power, information, respect, opportunity, time, health, security, and even of sleep”
  • Building a mutual business model would require very clear motives and steer determination -- "It’s much easier to feel good by giving away meals to starving kids in Sudan, but you are not going to solve any systemic problem in the world by doing that. This is business, and business is messy and you have to make hard decisions."
    • Sometimes even the poor communities may think that “we were a company… trying to take advantage of them”
    • Building a business model for the poor will need a lot of hard work, to win the trust of many stakeholders operating in the hybrid value chain we have set up (in the case of Project Maua / Project Bloom).
  • Intuitive knowledge is very important when trying to develop something for the low income groups
    • In Significance Labs, all six fellows are “zero or first-generation immigrants”, and “their families know what it was like to live a very different life”.
    • “Maybe the best long-term solution is to train a new generation of developers and designers from a low-income background to build their own solutions”

--Jia Yan Toh


Small & growing businesses are engines of prosperity: ANDE

The 4th annual Aspen Network of Development Entrepreneurs Impact Report looks at the role of small & growing businesses as engines of prosperity, and once again we like the group's focus on promoting business ownership as a way to create long-term sustainable economic development.

An overview of the role small and growing businesses play in economic growth is below, and the full report is available on our site, here.

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