" Making wrong decisions are sunk-cost bias can cost taxpayers money.  Making wrong decisions when they are subconsciously or unconsciously affected by people’s ideologies while they should in fact be assessing evidence also result in bad decisions," or so argued Stefan Dercon, professor at the University of Oxford and chief economist within the British Government’s Department of International Development, at the University of Navarra’s VI NCID Research Workshop.

The expert gave an address during the workshop organized by the Navarra Center for International Development (NCID) of the Institute for Culture and Society (ICS) and the Ramon Areces Foundation. He presented his research on the implications of public policy-makers having a bias.

His team carried out research on a group of new public employees, which showed that policymakers can fall into decision-making pitfalls, such as hidden costs or prioritizing ideological positions, despite having an explicit mission of promoting impartial and evidence-based decisions.

He noted that this study can help “enlighten within the organization that we should be conscious of some of the typical behavioral biases in decision-making that are well documented, but also to analyze what does it mean for the way we organize our public service, or indeed, even firms.”

Economy and bias

According to the specialist, there are few studies on the biases of professionals related to public policies. These professionals are public officials who prepare and implement the policies on behalf of elected candidates.

According to Dercon, "in most of the research on behavioral economics and, at least when it applies to policy settings, we seem to have focused largely on citizens, tax-payers, consumers not making the right decision, savers that don’t save enough or people that should buy pensions and not buying them."

"I thought [it] was interesting," he explained, "not [to] just assume that those people working inside the government make perfect decisions.”

Stefan Dercon referred to the bias that most affects him in his work as an official: "Economist[s] have a set of priors in the way the world works and sometimes we don’t have really strong evidence and we fall back on theoretical assumptions that are quite untested."

As an example he mentioned the issue of incentives. "I think incentives are crucially important but we should be very aware that people are not just driven by carrots and sticks, but they are actually driven by other things such as norms and values and their beliefs they have about how the world works to know what is the right thing to do. We should be very careful not to reduce it all the time to incentives.”