Markets

Abstract

Markets are a key place where poverty cycles can be broken. Confidence is to markets as oil is to engines. Without it, they will break down and become dysfunctional. Typically, confidence is applied to business and consumer markers, but confidence greases a much wider range of marketplaces, from labor and social to commercial and financial. This chapter considers how the psychology of these markets may combat poverty. Research from Uganda shows how people there feel that the country may have been better off without international aid—a lack of social market confidence. Private individual donors to Non-Government Organizations (NGO) often lack confidence in the ability of the NGO or governments to translate their gift into actual aid, fearing it may be ‘siphoned-off’ along the way. Research in New Zealand finds out where people draw the proverbial line, and how well it matches NGO’s own understandings of acceptable overheads, and accountability. In commercial markets, regional trade cooperation agreements are typically macro political, assuming that people will buy and sell without prejudice. Research at ground level shows this assumption is often naïve. Surfacing implicit biases against neighbors enables policies to become more street-smart. Financial markets too are often biased, e.g., by being over-susceptible to negative information about certain countries. Correcting such biases may enable foreign direct investment (FDI). Similarly, research markets may be hamstrung by lack of community trust. This chapter concludes with a series of “cognitive algorithms”, to help us decide when researchers, organizations, countries, and economies become worthy of our trust and confidence.

This urge to reduce the poor to a set of clichés has been with us for as long as there has been poverty. The poor appear, in social theory as much as in the literature, by turns lazy or enterprising, noble or thievish, angry or passive, and helpless or self-sufficient. It is no surprise that the policy stances that correspond to these views of the poor also tend to be captured in simple formulas: “Free markets for the poor,”…“Give more money to the poorest,” “Foreign aid kills development,” and the like. These ideas all have important elements of truth, but… If the poor appear at all, it is… not as a source of knowledge, not as people to be consulted about what they think or want to do

Banerjee and Duflo (2011, pp. vii–viii, boldface added)

Everything that companies do, or at least should do, comes back to the preservation of that core asset—the trust of the public

Hollender and Fenichell (2004, p. 45)