Hacking the World Bank: A New Freakonomics Radio Podcast
Since its inception in 1944, the World Bank, a multilateral organization charged with financing the development of poor nations, has been led by macroeconomists, bankers, and government insiders. The White House’s 2012 nomination of President Jim Yong Kim — a physician, anthropologist, and academic who used to advocate dismantling the Bank — broke the mold. He is the focus of our latest Freakonomics Radio podcast, “Hacking the World Bank.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)
In less than three years, Kim has overhauled the Bank and laid out ambitious goals — including a 2030 deadline to rescue the more than 1 billion people who live in extreme poverty. Kim is also — along with the Bank’s chief economist Kaushik Basu — eager to apply the insights of behavioral economics to development policy. That is the focus of Kim’s conversation today with Stephen Dubner.
Every year, the Bank releases a World Development Report that’s meant to communicate its policy objectives to the development community. This year’s report, “Mind, Society, and Behavior,” is focused on the success of behavioral interventions that have helped boost savings rates, reduce water consumption, improve education, and eliminate biases among development professionals themselves. The report distills years’ worth of academic research into a little more than 200 pages. In his foreword, Kim boils down the Bank’s message: “[W]hen it comes to understanding and changing human behavior, we can do better.”
Kim, who showed an interest in behavioral economics while president of Dartmouth College, says the report came about after he and Basu “were just sitting down one day and we were talking about behavioral economics”:
KIM: And we started talking about some of the work that I had become fascinated with when I was at Dartmouth, about things like willpower and grit and how they had an impact on success in life and development. And so, you know, he suggested one day that we just take this on. … It was a recognition that we really needed a rethink of where we were going with development strategy. And we also wanted to bring into the discourse of the World Bank Group these thinkers who’ve been so influential in academia but had been much less influential inside the World Bank.
While the report represents a step forward for the development community, Kim acknowledges that the private sector has been much quicker to adapt to behavioral insights. Why has the public sector been so slow by comparison?
KIM: Well, I think market forces are critical here. And sometimes people say, “Well, you know, the private sector does everything better.” And I don’t know that that’s really the case so much as the private-sector entities that did it poorly no longer exist, right? Because they go out of business. And public-sector entities can stay in business for a very long time no matter how poor their performance is.
You’ll also learn a good bit about Dr. Kim himself during the podcast — including how he used President Obama’s mother’s doctoral thesis to explain to the President why he was the right man for the job. Kim also answers an express version of our Freak-Quently Asked Questions, previously answered by London mayor Boris Johnson and Wired co-founder Kevin Kelly. You’ll see that Kim, who rapped at a Dartmouth talent show and quarterbacked his high-school football team in Iowa, is a pretty interesting guy.