People are neither completely rational, nor completely random in their decisions. Rather, people exhibit predictable biases that not only make it less likely that they will achieve their own stated desires, but also complicate the design and efficiency of public policy. These are some of the insights of the emerging applied behavioural sciences that combine theories and techniques from disciplines like economics, sociology, psychology and, to a lesser extent than might ideally be the case, anthropology. Another insight from recent research is that people living in situations of low income or other poverty are no more or less rational than others in more advantaged positions. Rather, there is less slack in their lives, meaning that the outcomes of observed biases in behaviour can be more problematic. With some notable exceptions, these insights from the applied behavioural sciences have not filtered through to policy formulation.
Policy related to Aboriginal and Torres Strait Islander (Indigenous) Australians is one example in Australia of an area where insights from the applied behavioural sciences have the potential to improve the quality of policy decisions. A relatively large amount of government funds is spent on Indigenous people reflecting a relatively high degree of health and socioeconomic disadvantage. There is therefore a greater need to understand the patterns and factors associated with decisions made by Indigenous people. On the other hand, many Indigenous people share a history and cultural context that means that the insights from the applied behavioural sciences are not necessarily always applicable. This presentation (and the paper that it is based on) is structured around four parts:
- an overview of the main biases revealed by recent empirical and experimental research including loss aversion, framing, hyperbolic discounting as well as research into determinants of subjective wellbeing
- a discussion of the applicability or lack thereof of this research to the Indigenous Australian context through the use of existing research and new data analysis, with a particular focus on health, education, income, wellbeing
- an overview of the policy implications of this research, and
- a discussion of our gaps in the understanding of the behaviour and decisions of the Indigenous Australians and some proposed research to fill these gaps.
Nick Biddle is a Fellow at the Centre for Aboriginal Economic Policy Research.