I like observing people. Not in a creepy, nosy way. More in a want-to-understand-how-people-behave kind of way.
For example, I pay attention to how people standing in front of me in a line pay for purchases. What I have observed, I am sure, is not the product of bad luck: a not-insignificant fraction of people paying in cash (counting out change … for a while … holding up the line). This always intrigues me, since I find paying with credit or debit cards so convenient (and fast). That way, I don’t need to take frequent runs to the ATM, or keep tabs on how much cash I need vs. how much I have. I can track how I am spending my money, and in the case of credit cards, there is the added bonus that I can hold on to my money longer, since I can pay in full at the end of the following month’s cycle, so as not to carry a balance.
I have asked people why they prefer paying with cash and they often cite “cost” (but most merchants do not charge you extra when you use your credit card, and if they plan to do so, they must let you know in advance, at least in the United States). People also mention their need to know how much they are spending, or their need to control how much they spend (there may be some truth to that—see this link).
My sense is that these are just their narratives, the story they created to justify their decision. For some reason they prefer cash, they are in the habit of using cash, and chances are they are going to keep using cash for a while (and I am not talking only about old people, I am also talking about millennials). Although credit cards were first introduced in the 1950s, and about 80 percent of households in the United States have a credit card, only 17 percent of transactions in 2012 were done via credit cards (40 percent of transaction were done via cash). My guess is that it’ll take a while until we see cashless societies.
That is not surprising. There’s often a gap between the time a technology is developed and the time people are convinced that that technology is worth paying attention to (a gap between changing the world and convincing people that you changed the world).
Which bring us to the work of development organizations: We are in the business of testing innovative intervention models aimed at creating economic opportunities and decreasing poverty. Innovation is key for our projects. We see the pace of innovation and technological progress accelerating, and we want to incorporate as much of it as possible into our projects. We are convinced it will improve the lives of our project beneficiaries. But sometimes, we are so excited about the innovation (and the technology involved) that we forget that our goal is to solve a problem—a pressing problem that in most cases involves humans. Sometimes a cheap, low-tech solutionwill do.
There are plenty of examples of potentially welfare-improving, innovative products and services out there that were not adopted (see some examples here, here, and here). As a matter of fact, the rate of product (and service) failure is pretty large: between 40 percent and 90 percent, depending on the category. But why?
Most times, what holds back the adoption of innovative products and services is precisely human behavior, rather than the availability of new technologies (sometimes people don’t want something truly new, they want the familiar done differently). Anyone who has tried to convince someone else knows that it is really hard to change people’s minds, and even harder to change people’s behavior.
The adoption of new products and services requires changes in behavior, but habitsand quirks of our minds conspire against those changes. As a development agency, we are tangentially in the business of offering products and services, via our partners: from transport of laboratory samples and medicines in rural areas using drones, tomobile financial products that reduce the use of cash (oh! the irony).
To succeed, we must refrain from twisting users and clients’ arms and demanding that they change their ways because it is “good for them” … they won’t do it. To satisfy users’ needs and wants, we must observe them and pay attention to their behavior. Developing products and services based on stated preferences rather than on observed behavior won’t work either; it may increase uptake, but not necessarily use … by the way, are you interested in buying a treadmill in mint condition?
So, technological progress alone won’t cut it. If we want to increase our rate of project success and contribute to changing lives for the better, we must strive to offer behaviorally compatible products and services. Fortunately, development agencies like the World Bank, USAID, and the Multilateral Investment Fund (with help from partners like ideo.org, ideas42, and GRID Impact) are starting to observe people and pay attention to their behavior. Hopefully we can accelerate progress in that direction, too.
From the Multilateral Investment Fund Trends blog