By Andrew T. Hupp
On September 28, Sewanee alumna Huma Khan (C’08) revisited her old campus to give two lectures on her career focuses and academic accomplishments. In addition to a lecture on gender equality, Khan discussed behavioral economics.
As a student at Sewanee, Khan studied politics and economics and was given several selective academic recognitions such as the Lancaster Award for achievements in politics and the Biehl Fellowship for international research. After attending Sewanee, Khan went on to earn a Masters in Public Administration and International Development degree from Harvard’s John F. Kennedy School of Government.
Since then, Khan has travelled the globe and has become highly involved in the world of international development. Khan now works at Ideas42 as a senior associate focusing on finance related issues. Ideas42 is the first behavioral design lab in the world, focused on integrating the subjects of psychology and economics to gain a more accurate picture of the world, and thus the world’s problems. In her lecture covering behavioral economics, Khan discussed in detail how utilizing this perspective could mean massive progress in the world of economics.
“There’s more to people’s decisions than it seems,” Khan claimed. She used six principles to solidify her point: social norms, conflict of choice, limited attention span, mental accounting, procrastination, and scarcity. Among these it was reiterated that “context matters” and that with each situation “our mental representation leads to conclusions” and it is easy for fluctuations to occur due to the individual circumstances.
However, using rigorous scientific methods and data collection, Khan and ideas42 were able to show a direct application of behavioral economics in the world, especially in international development. Through Khan’s research, the solutions to poverty, poor health, and financial issues can be simplified to a science that shows how real people react to real situations. Traditionally, economics ignores this behavior and treats every individual as a “rational” thinker, but this world is not rational.
Khan stressed the point of scarcity of resources within poverty and the fact that “scarcity begets scarcity”. Through this quote, she is simply confirming the reality of poverty traps within lesser developed countries. However, through the use of behavioral economics, scientists can begin to mitigate the influences of poverty and help the impoverished rise above their environments.
Through the application of behavioral economics, people may begin to understand some of the world’s greatest complications, and perhaps even begin to resolve them along the way.