Art And Science Of The Nudge – Innovation In Indian Policymaking

Vinayak Dalmia

Sep 21, 2017, 08:57 PM | Updated 08:57 PM IST

Students and workers participate during the Swachchta Rally flagged off by Union Minister Venkaiah Naidu at India Gate, in 2016, in New Delhi. (Sushil Kumar/Hindustan Times via Getty Images)
Students and workers participate during the Swachchta Rally flagged off by Union Minister Venkaiah Naidu at India Gate, in 2016, in New Delhi. (Sushil Kumar/Hindustan Times via Getty Images)
  • Governments are architects designing our range of choices and social environment. Using formal behavioural science towards design, they can craft smarter policies in achieving better end objectives.
  • For certain niche issues, establishing a “nudge unit” will be beneficial for India.
  • In September last year, a news release stated that NITI Aayog, in partnership with the Bill & Melinda Gates Foundation, will help set up a “nudge unit”. The stated aim is to deepen the reach of certain flagship programmes including Swachh Bharat, Jan Dhan Yojana and Skill Development.

    Mainstream publications have also begun to argue for the same. Since a lot of India's social problems are behavioural in nature, subtle, inexpensive changes in the “environment” prove more effective than elaborate laws or policies. Prime Minister Narendra Modi himself hinted at the psychological nature of ills such as gender violence and sanitation. Pratap Bhanu Mehta states – “social failure is as serious a matter as market failure”. The Prime Minister has started with moral persuasion on issues of cleanliness or giving up LPG (liquefied petroleum gas) subsidies. A formal and rigorous approach to some of these problems should be the next logical step.

    Government and/or policymakers are in many ways architects designing “choices” and social environments we live in. As designers, they must leverage the fundamental truth that all actors and agents are psychological beings having less-than-perfect rationality. So, while behavioural science operates on the premise that the brain is prone to making mistakes, psychology can address the flaws and design smarter policies.

    For example, open defecation is a big problem in India. It stands tangential to the Prime Minister’s Swachh Bharat dream. In spite of building toilets, in some cases, the usage rates are no more than 50 per cent. World Bank economist Nidhi Khurana has proposed communicating the harms of this behaviour as opposed to the benefits of using a toilet. In effect, she is suggesting the use of the theory of “loss aversion” which states that people value potential losses more than potential gains (on average, twice as much). Studies have also found that subtle changes in the sense of ownership bring significant improvements.

    Noteworthy is the immunisation rate in Rajasthan. It increased after free lentils were given to women who brought their children to dispensaries. Colour-coded footprints in the Delhi Metro is borrowed from Copenhagen in order to institute better civic sense. In Kenya, weekly text reminders help ensure HIV patients adhere to medication schedules.

    Nudging: Behavioural insights, no-drop policy, opt-in-opt-out

    Forty-eight United States (US) cities have used behavioural thinking to solve domestic violence against women. Prosecutors refuse to drop charges against the abusive male if the woman changes her mind. This “no-drop policy” offers women a way out of abusive relationships, and is based on a standard theory of hyperbolic discounting which explains why our choices are inconsistent over time. Right after a violent episode, a woman’s perception of the relationship is low but changes as time passes. The same reason can be attributed to people who struggle to stick to diets. Economists Anna Aizer and Pedro Bal Bo point out to a National Bureau of Economic Research (NBER) study. It is easy to imagine the same having applicability in India.

    Others have highlighted that nudging could be particularly useful in India in increasing voter turnouts, reduction of littering and improving timely and honest tax payment.

    These findings should not be altogether surprising. As a collective, we live a shared reality which has several psychological underpinnings. This is something the advertising world has known and leveraged for years. The entire notion of subliminal messaging to make certain brands or products appealing or “cool” is based on many of the theories of this science. Policymakers have long grappled on encouraging citizens to make better choices ranging from energy usage to paying taxes.

    Globally, there are several practical examples of nudging. In England, a simple change of language and visuals in official communication tripled the collection of vehicle taxes. In Denmark, a simple change of signage reduced littering by 46 per cent. Other examples include reduced energy consumption among Americans by sharing with the consumers their neighbour’s consumption pattern, increased college enrolment and improved academic performance. Former US president Barack Obama also tried this approach by increasing contribution in the 401 (k) retirement schemes; this intervention boosted annual savings by $7 billion.

    The most potent use was displayed in 2008 by Duke University economist Dan Ariely during a well-received TED talk. He used behavioural thinking to explain organ donation. Culturally, similar countries had shown a large discrepancy in this. For example, organ donation rates in Sweden stood at 86 per cent whilst in Denmark it stood at a much lower 4 per cent – a simple function on how choices were framed.

    In Denmark, the drivers form had an “opt in” choice as opposed to Sweden's “opt out” choice. Since then, a bill has been introduced in the Danish Parliament to make the required changes in the hope of increased organ donations. In Britain too, vehicle licence applicants will now have to fill out a “required choice” on donation. This change is projected to bring in an extra ten lakh donors over the course of this British Parliament.

    The Nudge Unit can trace its origin to 2010 when the then British prime minister David Cameron established a Behavioural Insights Team (BIT) to tackle a wide range of projects. The BIT was comprised of a group of civil servants, psychologists and economists, and its stated objective is to “find intelligent ways to encourage, support and enable people to make better choices for themselves”.

    The BIT has been working on organ donation, healthier food, consumer empowerment, tax and the environment. It was projected that the British taxpayer would save in excess of £300 million over the next five years. According to its managing director, Owain Service, “[T]he unit starts from small and not so costly interventions and scale them up into policy as they prove to be effective.” The BIT has spun off from the government (now partially owned by the cabinet office) and considers itself a social purpose company.

    The world has begun to take notice. Obama's 2015 executive order to use behavioural science to “better serve the American people” was a massive sign of approval. Australia, Singapore and the World Bank have also been using behavioural research to deliver better social outcomes.

    Commenting on the increasing global appeal, former British Minister Grant Shapps remarked: “We have led the way in this innovative field.. I am proud that it will be recognised on a global scale.

    In principle, the BIT has put into practice an idea popularised by American academicians Cass Sunstein and Richard Thaler in their 2008 book Nudge. In the book, Sunstein and Thaler promulgate the philosophy of “libertarian paternalism”. They argue that people are subject to biases and prone to predictable irrationality. In summary, if the social context can be altered, people can be nudged to make more rational choices. Thus, the government is viewed as a “choice architect” organising the context in which people make decisions. This affects everything from designing the voter ballot to designing employee healthcare forms. The mainstream literature is now inundated with this thinking. According to Sunstein, “[T]he elaboration of behavioural economics is the most exciting intellectual development of my lifetime.”

    The intellectual foundations of behavioural economics were laid in the 1960s when the sub-discipline was gaining momentum. A sub-branch of economics, and often contrary to long-accepted economic theories, this area of study views individuals as irrational beings, prone to mistakes and errors in decision making. Scholars Amos Tversky and Daniel Kahneman are considered to be the modern propounders of behavioural economics. Kahneman along with Vernon Smith shared the Nobel Prize in 2002.

    These tools have also captured the imagination of politicians. In his 2012 presidential rerun, Obama established a consortium of behavioural scientists, or COBS to help craft the message . From being fiercely loyal to the colour blue (denoting trust and loyalty), to choosing certain texts or pictures in communication, the campaign had a distinctly scientific approach to win hearts and minds. The details of this are captured in the book The Victory Lab by Sasha Issenberg.

    India, a visual nation

    In the Indian context, there is merit in looking at Nudge 2.0 – empowering the established tools of behavioural thinking with the two Ds of design – thinking and digital. More than 99.9 per cent of brain processes occur at the non-conscious level with five to 10 times faster processing than at the conscious level. Therefore, design thinking comes into play. Simple non-conscious designs have been developed in making driving safer, honesty of taxpayers in filing tax returns, adherence to medication, among others.

    Moreover, India is becoming a predominantly visual nation constantly starring at its smartphone screens. The number of internet users in 2019 is projected to be over 520 million, over 50 per cent of whom will be on Facebook. The penetration of smartphones is also projected to increase to 48 per cent by 2019. In a largely digital visual world, a lot of behavioural interventions will be online. A powerful use-case is shifting the narrative on terror and extremist ideologies. For example, a study by the International Centre for the Study of Radicalisation and Political Violence (ICSR) proposes the idea of using nudge to counter online radicalisation. It promotes using “positive messages” over traditional technical solutions such as removing or blocking content. Another report argues for behaviour science as part of counter-terror strategy.

    There is of-course potential of misuse of such tactics. Recent emergence and impact of “suicide game” and “blue whale challenge” is a classic example of online manipulation of vulnerable minds. 

    Nudging is not perfect. It is important to note the three major limitations of behavioural interventions.

    First, it can lead to a paternalistic state with serious ethical concerns. With the digital interventions enabled by large amounts of data (accelerated by machine learning and automation), the potential for abuse and misuse rises. With the recent Supreme Court judgement on privacy, such issues will crop up. It is important to see that policy designers themselves are not immune to behavioural shortcomings.

    Paternalism does have its critics with strong objections to “manipulation of choice which may lead to a nanny state”. People do not always appreciate governments interfering in their decisions. As Mayor Bloomberg of New York found out in his unsuccessful attempt to impose curbs on sale of large soda drinks. However, both Sunstein and Thaler defend this by laying emphasis on the libertarian aspect of their philosophy. They maintain their approach does not interfere with freedom of choice.

    Second, there are limitations on the use-cases. Behavioural science may help the government design better social programmes, but they have limited use in solving the chaotic challenges of economic growth and stability. A recent article elegantly delineates four types of problems we face: individual action in private (domestic violence), individual action in public (open defecation), collective action in private (honour killing), and collective action in public (the spread of communicable diseases). The author argues that nudging is ripe to solve those problems that originate due to individual actions. Moreover, some change is easier than other, and that policymakers would be best advised to identify the low-hanging fruit first. In a similar vein, writing for the New Yorker, Atul Gawande identified some behaviour changes happen quickly while others take longer. According to him, anaesthesia spread across hospitals rapidly while adoption of antiseptics was a lot slower.

    Behavioural science may help the government design better social programmes, but they have limited use in solving the chaotic challenges of economic growth and stability.

    Third, what works in one state or district may not work in another. Moreover, not all principles will be universal or global. Therefore, context testing is critical.

    India is a young country with great potential. However, it suffers from extreme wealth inequality with some studies claiming one in five Indians as being poor. A poor population with multiple regional and societal differences faces a host of social issues. The list is long: female infanticide, deep superstitions, drug abuse among youth (in certain states), child marriage, dowry, littering, non-payment of taxes and corruption, to name a few. Limitations notwithstanding, there is a large gap where subtle nudging measures could create tremendous impact. Moreover, India’s federal system means that this measure can also have a regional percolation among its 29 state governments. Add to that the numerous local bodies enacting legislation that can be the biggest social experiment of its kind ever tried to change the world and touch 1.2 billion lives.

    According to the vice chairman of Ogilvy & Mather, Rory Sutherland – “No one who believes in science can oppose this approach.” He too believes this has great scope in India. The best way forward would be to identify a single issue in a single area and take a sandbox-like ‘pilot’ approach before scaling up. Strong evidence before a policy or intervention is required before deployment at scale.

    In the private sector, there is a constant clamour for fresh thinking. Governments should be no different and should embrace innovative out-of-the-box ideas. It is in that context that a fresh approach to policy is ripe for India.

    This piece was first published on Observer Research Foundation and has been republished here with permission.

    Vinayak Dalmia is an entrepreneur and political thinker. He has worked with the Indian Prime Minister’s Office and McKinsey & Co. Vinayak regularly writes and speaks in the media on current affairs. He has studied economics at Cambridge and University of California, Berkeley.

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