Accepted Paper:

The economics of alternative facts: lessons for development cooperation  


Paul Marschall (German Development Institute (DIE))

Paper short abstract:

People use heuristics and shortcuts for managing complexity. Globalization has transformed individual perceptions: they are prone to simple solutions, offered by politicians in their aim for getting support. For dealing with populism in development cooperation an adequate framing of issues is needed

Paper long abstract:

Populism is not a new phenomenon. It can be linked with diverse sets of left- and right-wing approaches. Countries in the global north and south are affected differently. There is evidence that a country's type of integration into globalization has consequences for concrete populism patterns. Alternative facts are used by politicians as narrative for justifying their arguments. This paper analyses populism from the perspective of behavioural political economy, provides an understanding why people can be vulnerable to populistic arguments, and gives suggestions for dealing with it related to development cooperation.

People are not fully rational. Therefore, heuristics and shortcuts are used for managing real world complexities, e.g. in terms of risk perception, adaptive expectations or wishful thinking. Belief distortions are relevant at the level of voters and politicians. The complexity of globalization and the corresponding individual perceptions has transformed voters' expectations, including fears, frustration, or hopelessness, which are dependent on individual values and morals. Thus, people are prone for simple solutions. The field of development cooperation is particularly vulnerable for this. For politicians, populistic wording is a strategy with costs (hostilities) and benefits (support by citizens).

Development cooperation must face the challenges which arise by populism. Think tanks providing policy advice must address them in their pathways to impact. Behavioural insights must be covered in communication strategies to citizens. There is evidence that electoral success is highly sensitive in terms of the corresponding wording. In addition, existing reporting of development cooperation activities must be supplemented by a targeted framing.

Panel G1
The rise of populism and development cooperation