Behavioural economics has become increasingly popular over the last decades and has helped shape decisions in ordinary environments like increasing the consumption of vegetables of households or increasing organ donations. However, there has been little exploration of behaviour in extreme contests like conflicts, war zones, disasters, calamities, and high-stress events. While there is a consensus worldwide about the importance of peace, wars and conflicts are extremely difficult to prevent as it brings consequences to those who live it and, as such, finding adequate policies may prevent the loss of lives.
Reasons
The fundamental reason to apply behavioural economics to conflict zones is that decisions made in this extreme environment can significantly affect the probability of survivability, not only for the parties involved but also for their family, friends, or even other members related to them.
These decisions are made with confusion, anxiety which make high-stress situations an important source of study for the understanding of human behaviour. While the unfortunate and tragic loss of lives is indeed grief-stricken, these events are a source of study for the decision-making processes of individuals under extreme pressure.
Distance to war
Behavioural economics suggest people display systematic cognitive biases on daily basis. These are most efficient in ordinary situations but can be tremendously hazardous in extreme ones. The status quo bias is an example of people’s tendency to remain in their current situation even if leaving or changing may lead to a better outcome. In conflict environments, where the consequences of staying may lead even to death, status quo bias can worsen the situation.
Lerner and Keltner (2000) and Shahrabani et al. (2012) showed through the study of soldiers and students in Israel, specifically in the region of Gaza, that not only does anxiety and fear affect the perceived risk of the inhabitants, but that it may also impact on the decision to remain in a conflict zone. Surprisingly, they concluded that geographical distance from a war zone does not always influence negative emotions nor the need to flee. So why so counterintuitive?
According to World Bank, the answer lies in risk preferences, a crucial factor in influencing the decision-making process in extreme situations. Risk-averse people are willing to accept lower outcomes that are more secure. However, when assessing if one option is more secure than another, the status quo bias comes into action. If one is fleeing conflict, they know the probability of getting hurt or killed is lower, but also has a higher probability of a lower outcome, or total lack of income. Therefore, the decision-making process is based on this trade-off: the possibility of getting hurt or not being able to support themselves.
As an outside observer, one might think that the latter is worse than the former, which is not how those who live it might perceive it. This has led to the underdevelopment of economic theory examining the choices or motivations of individuals within these environments, resulting in sub-optimal models and policies.
The Role of Behavioural Economics
The Global Trend report by the UN Refugee Agency estimates that over 68 million people every year flee from conflict zones. Most refugees seek asylum abroad, increasing pressure in neighbouring and European countries, which are usually the most seek upon (both for historical factors as colonization and geographical proximity). There are big implications for Behaviour Economic policies because it means it is necessary to distinguish between the forcibly displaced, those who are in a high-stress situation, conflict zones and those that search for higher-paying jobs. In other words, being able to better distinguish economic migrants from war refugees, but most importantly high-risk takers from risk-averse individuals, which require different policies and approaches.
Furthermore, disregarding that individuals behave in different ways when faced with various levels of stress could lead to worse outcomes. The study made by David A. Savage, in 2013, demonstrated that the behaviour of individuals in stressful and disaster events does not follow the traditional widespread belief of mass panic. As it was claimed, the behaviour is neither random nor inexplicable as it can be accounted for through rigorous analysis. Recent research has demonstrated that economic analysis can account for human behaviour in such situations and that traditional models of behaviour are not only wrong, but also these models do not assist in the creation of successful disaster planning nor maximising survival outcomes.
Conclusion
Behavioural economic science can have a particularly key role in adapting economic models and contribute to the policies having a significant impact on those people whose lives have been deeply affected by these circumstances. Tailored policies can not only be more effective than conventional and generalized current one, but they can also significatively reduce their implementation costs allowing more people to enjoy their benefits.
Author:
Sofia Murça – Research Analyst
References:
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