Going beyond technological fixes

The NITI Aayog has decided to come up with a behavioural science unit as part of planning strategy. This is a departure from the governance style of the current government that favours technology as a primary tool to effectively implement policy. The government has backed technology-driven policy like Aadhaar and targeted social policy projects using information and communication technology (ICT).

In this context, application of behavioural sciences to policy design and implementation is a new and welcome departure. Developed countries such as the US, UK , Australia and Singapore have full-fledged behavioural sciences teams closely working with the government. They aim to make policies cost effective, easy to understand and help people make better choices for themselves.

The assumption of rationality that the standard economic theories propose is only partially true. Humans are inept at revealing their preferences consistently or take decision that maximises their satisfaction and in their best interest. A host of issues plague how we decide among choice, and this has been a theme of intense research in the past four decades leading to the birth of behavioural economics.

This was pioneered by Amos Tversky, Daniel Kahneman (Nobel laureate in economics, 2002) and Richard Thaler, the eminent Chicago economist widely acclaimed as the founder of behavioural economics. The application of human psychology on our modes of thinking has created a field of inquiry that understands how we think, rationalise and act. According to behavioural economics, we think both fast (intuitively) and slow (deliberately and rationally). The interesting point is that both kinds of thinking yield very different results when applied to the same problem.

In the hundreds of situations that we encounter every day, we use the fast brain to approximate and assume incorrectly leading to inherent biases, prejudices and miscalculations. Often, we are unable to think about what is in our best interest.

We nearly always choose short term over long term, have bounded rationality as well as limited will power and go terribly wrong in assessing risks in high stakes situations. Issues of framing, endowment effect, mental accounting, misremembering and hindsight bias- all make us human and erringly so!

These behavioural fallacies have severe costs in public policy implementation especially in social policies aimed at welfare. Savings plan remain unused, toilets appear less palatable with wide practice of open defecation, immunisation initiatives even when offered free has no takers — all these policy paradoxes can be explained through the choice architecture framework that a behavioural science unit will help propagate.

Behavioural economists have discovered a tool called ‘nudging’ to help us make better choices. So what is nudging? Nudging is effectively prompting us to take a desirable choice out of the many options we face by altering the design of choice. For instance, in a pension plan that makes saving the ‘default’ option, more people are likely to stick with default plan over and above all other choices, making them wealthier in the long term.

Here ‘default option’ is the nudge. Similarly, an example from Rajasthan village shows, in an immunisation programme, incentivising mothers with lentils as free gift nudged more children from benefiting from the programme.

These are examples where we are encouraged to choose based on mild incentives rather than more punitive policy options such as penalties or taxation. These nudges are sensitive to how our behaviour is flawed against rational, sensible choices.

The behavioural insights team in India will have to grapple with some peculiar constraints in addition to the failure of the citizen to make informed choices. In the Indian context of Behaviourally Induced Governance ideas (BIG ideas), there are three main challenges that we are likely to face.

The first is inadequate economic growth and development with serious inadequacy in infrastructure. Both educated public and effective infrastructure serve as the backbone of a successful nudge plan. Secondly, in a vastly diverse country like India, the contexts and social norms are so locally specific that a broad generic nudge from the centre is likely to be ineffective. The behavioural team will have to come up with creative thinking on reaching the larger audience through a universal approach that is flexible to cater to the local specificities.

In a cultural context sensitive to social norms, this is democratically respectful. The final challenge is something that has bothered the societies of the West as well. Creating choice architectures that nudges us to choose one option over another is ‘paternalistic’ in that choices are being made for us.

This could run against the liberalism that gives us the freedom to choose rather than treat us like infants.

Public policy design and implementation in India have been mired in obscure intentions and borrowed rationale most of the times in our country. Sometimes, even the well intentioned policies of the government remains ineffective due to a number of unforeseen circumstances especially that of public perception, collective social norms and behaviour. In this scenario, a more scientifically approached policy design can be an inexpensive and creative tool in the hands of government.

However, wider education on the policy approaches taken and deliberation about its desirability within the democratic set up will help us take a genuine departure towards an inclusive participatory policy making.

Nudging has potential to be the policy that is inexpensive, easy to understand and in the best interests of the largest number of people in our society.

The writer is an adjunct professor at National Law School of India University, Bengaluru

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