Bounded Rationality and Policy Diffusion

Bounded Rationality and Policy Diffusion: Social Sector Reform in Latin America

Kurt Weyland
Copyright Date: 2006
Pages: 312
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  • Book Info
    Bounded Rationality and Policy Diffusion
    Book Description:

    Why do very different countries often emulate the same policy model? Two years after Ronald Reagan's income-tax simplification of 1986, Brazil adopted a similar reform even though it threatened to exacerbate income disparity and jeopardize state revenues. And Chile's pension privatization of the early 1980s has spread throughout Latin America and beyond even though many poor countries that have privatized their social security systems, including Bolivia and El Salvador, lack some of the preconditions necessary to do so successfully.

    In a major step beyond conventional rational-choice accounts of policy decision-making, this book demonstrates that bounded--not full--rationality drives the spread of innovations across countries. When seeking solutions to domestic problems, decision-makers often consider foreign models, sometimes promoted by development institutions like the World Bank. But, as Kurt Weyland argues, policymakers apply inferential shortcuts at the risk of distortions and biases. Through an in-depth analysis of pension and health reform in Bolivia, Brazil, Costa Rica, El Salvador, and Peru, Weyland demonstrates that decision-makers are captivated by neat, bold, cognitively available models. And rather than thoroughly assessing the costs and benefits of external models, they draw excessively firm conclusions from limited data and overextrapolate from spurts of success or failure. Indications of initial success can thus trigger an upsurge of policy diffusion.

    eISBN: 978-1-4008-2806-7
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-x)
  4. Abbreviations
    (pp. xi-xiv)
  5. CHAPTER 1 The Puzzle of Policy Diffusion
    (pp. 1-29)

    Why do dissimilar countries adopt similar policy innovations? Why do some new policy models therefore diffuse across regions of the world, spreading like wildfire from the originating nation to countries with different economic, social, or political characteristics? Examples of such striking waves of diffusion abound. The social security system enacted by Otto von Bismarck in Imperial Germany quickly found emulators, first inside Europe, but soon on other continents as well. In this way, a policy scheme designed to pacify a powerful, well-organized, and increasingly militant working class spread to countries where workers constituted a small minority—sometimes noisy, but certainly...

  6. CHAPTER 2 Toward a New Theory of Policy Diffusion
    (pp. 30-68)

    As chapter 1 shows, the cross-national spread of innovations raises three major issues that speak to the basic question of rationality in politics, namely, external imposition vs. domestic autonomy; normative and symbolic vs. utilitarian motivations; and comprehensive vs. bounded rationality. These three issues give rise to a nested set of four theoretical approaches to the study of policy diffusion. First, an argument that emphasizes external pressures stands in contrast to three theories that claim a significant degree of domestic latitude and depict symbolic and normative appeal, comprehensive rationality, and bounded rationality, respectively, as the main mechanism propelling diffusion. Among the...

  7. CHAPTER 3 External Pressures and International Norms in Pension Reform
    (pp. 69-96)

    To what extent have external pressures and new international norms shaped pension privatization in contemporary Latin America? The frameworks that highlight these factors see policy diffusion arise from powerful foreign influences on decision-makers’ goal pursuit. According to both approaches, external influences induce domestic policy-makers to act in ways that differ from their original goals. These two frameworks thus diverge from the rational learning and cognitive heuristics frameworks, which assume that foreign experiences affect the instrumental calculations, but not the goal pursuit and interest definition of domestic policy-makers.

    But despite this basic commonality, the external pressure and normative appeal approaches differ...

  8. CHAPTER 4 Cognitive Heuristics in the Diffusion of Pension Reform
    (pp. 97-141)

    External imposition and new norms were not decisive for propelling pension privatization, as chapter 3 shows. Instead, this reform wave resulted primarily from instrumentally driven domestic efforts to resolve pressing problems that threatened long-established interests. The present chapter investigates the crucial question of whether national decision-makers pursued these goals by approximating the ideal-typical postulates of comprehensive rationality or by applying bounded rationality. Did they proactively search for the relevant information and process it in a systematic and balanced fashion, or did they rely on cognitive shortcuts that selectively guided their attention and skewed their judgments?

    My field research shows that...

  9. CHAPTER 5 External Pressures and International Norms in Health Reform
    (pp. 142-180)

    In what ways is principle diffusion in health care similar to model diffusion in social security, and in what ways does it differ? This chapter examines pressures from international financial institutions and the impact of new development norms; it thus assesses structural and constructivist arguments, as chapter 3 did for pension privatization. Chapter 6 then investigates whether comprehensive or bounded rationality prevails in decision making. In particular, do the heuristics of availability, representativeness, and anchoring shape health reform, as chapter 4 documented for social security reform?

    Chapter 3 showed that IFI pressure helped advance pension privatization but was not the...

  10. CHAPTER 6 Cognitive Heuristics in the Diffusion of Health Reform
    (pp. 181-214)

    While external pressures and new norms contributed to the spread of health reform (see chapter 5), cognitive heuristics also shaped this process in important ways. Experts and decision-makers did not proactively scan the international environment and evaluate foreign innovations in a thorough, systematic way, as comprehensive rationality would require. Instead, bounded rationality prevailed, as in the diffusion of pension privatization. Above all, the availability and representativeness heuristic provided a major impulse for efficiency- and equity-oriented health measures in the 1990s. New experiments adopted in the region, especially Chile’s partial health privatization of 1981 and Colombia’s comprehensive restructuring of 1993, were...

  11. CHAPTER 7 Bounded Rationality in the Era of Globalization
    (pp. 215-238)

    This study provides the first in-depth analysis of policy diffusion in Latin America. Focusing on social sector reform, it demonstrates how foreign models and principles enter the radar screen of experts and policy-makers; how they are assessed and evaluated; and how decisions on their adoption and adaptation are made. In this way, it elucidates the reception and emulation of foreign innovations. Whereas a number of authors have analyzed the teaching of new norms and models, especially by international organizations (see recently Barnett and Finnemore 2004), learning by recipient countries has so far elicited insufficient attention.¹ My study helps to fill...

  12. References and Interviews
    (pp. 239-282)
  13. Index
    (pp. 283-297)