From “The Good-Luck Charm That Solved a Public-Health Problem” by Eleanor Smith:
In 2008, Christopher Charles was living in Cambodia and researching anemia…
Charles, a Canadian epidemiologist, knew that iron-rich foods and supplements were too expensive for most rural Cambodians. Even cast-iron pots, which safely transmit iron to food as it cooks, were out of reach. But he wondered whether a small piece of iron placed in a standard aluminum pot would have a similar iron-releasing effect. To test his hypothesis, Charles distributed blocks of iron to local women, telling them to place the blocks in their cooking pots before making soup or boiling drinking water. The women promptly put them to use as doorstops.
After talking with village elders, Charles learned of a fish known as try kantrop, which the locals ate frequently and considered a symbol of good luck. When he handed out smiling iron replicas of this fish, women started cooking with them. “People associated it with luck, health, and happiness,” he says. Within 12 months, Charles reports, anemia in villages where the fish was distributed virtually disappeared.
The genius of the Lucky Iron Fish is that it does not have to be shaped like a fish. “If we were to go to sub-Saharan Africa,” says Charles, “or a dry area where fish is not an important part of the diet, we could very easily change it to a different symbol of luck.”
Preferences matter, and that is displayed in Christopher Charles’ interventions in Cambodian cooking culture, and his design for better ways of cooking. Charles’ actions in Cambodia are certainly a top-down intervention with an epidemiologist using his technical knowledge in order to change the institutions of a society in this case the rules of the game of cooking. His iron bars are institutional design, seeking to enhance human flourishing, but they failed at first because Charles’ failed to take the preferences of those he was trying to help.
When Charles tried his first intervention, his attempts to change the way that Cambodians cooked their food were unsuccessful because they did not mesh with the Cambodians’ culture and habits, all of which are subsumed under the concept of preferences. The reaction that the women had to the iron, either in block of piscine form, would be categorized as preferences by economists, and those reactions determined whether the women would either use the iron as a doorstop or as a complement to their diet. When Charles’ intervention did not elicit the desired response from the Cambodian women, it was because his intervention did not work along with their preferences, and elicit the right response. However, once Charles’ intervention worked with their preferences, and elicited the desired response, then it worked, and the Cambodian women used the iron supplements in their cooking.
For better and for worse, economics identifies all of the reasons for behavior that motivate people in their lives under the category of preferences. For better because preferences enables economics a simple category to think about human action in a teleological manner. What made Jim go to the grocery store? His preferences! They are, after all, his reasons for action. For worse because preferences blind economists to the fact that human beings general act in a program-like, and habitual manner compared to the lighten-rod calculator comprised of preferences. Nevertheless, the concept of preferences does its job well because economics is more concerned with the conscious action than with the psychological intricacies of all of human nature.
Economists are naturally interested in how institutions form human behaviors. From David Hume wondering about what institutions would form the best outcomes even if all men were knaves to Elinor Ostrom writing about how informal institutions are able to maintain human cooperation despite the lack of formal institutions, the question of what kinds of institutions enable human flourishing has been one of the most important research programs running through the mainline of economic thought. Putting preferences into a black box hurts this research program because it conceals the way that individuals and institutions have evolved through history.
Institutions do not exist within a vacuum; rather, they have evolved through time changed by the different circumstances they have faced, and by the people within them. In addition, endogenous preferences, the replication of preferences across a shared institutional context, are common across the world. In that light, preferences can be looked at like accents. Human beings can consciously try to attain certain preferences, but for the most part - especially if we live an life unreflected on - we are unconscious to the manner we have come to attain our preferences, and so many of them we have simply acquired from our environment. Since the preferences of a population have exerted a crucial influence upon the evolution of their institutions, we need to understand the preferences of a population if we are to understand the success, or failure of its institutions. More tersely, culture matters.
Overall, the failure of Christopher Charles’ first attempt to improve the iron within Cambodians’ diet is an illustration of the importance of preferences to the study of human society, and to the success of institutions. Institutional design is of interest to any student of human institutions because it can shed light onto the functioning of institutions within a complex world. For Charles’ design, it sheds light upon the necessity for institutions to work alongside preferences if they are to lead to desired outcomes.
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