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The importance of behavioural economics: are people rational?

development profile

Country S

Consider the economic data provided below and see if you can use them to identify Country S

Figure 1 Trends in the human development index

Country S is a low-income country according to its gross national income (GNI) per capita (measured by the World Bank Atlas method). Indeed, it is in the bottom 15 countries in the world on this indicator. In terms of its human development index (HDI), Country S is in the bottom 10 low human development countries in the world. The most recent data show that about 50% of the population of Country S live below the poverty line of $1.90 per person per day.

Figure 1 shows how the HDI has changed over time. There seems to have been a steady improvement between 1990 and 2010, but a flattening off after then. Figure 2 shows birth and death rates for Country S. You can see that the gap between birth and death rates has been widening over time, which has implications for the growth rate and age structure of the population. In 2014, 47.5% of Country S’s population were aged 14 or below.

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The importance of behavioural economics: are people rational?

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