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Business News/ Opinion / India’s nudge unit: An idea whose time has come

India’s nudge unit: An idea whose time has come

India needs to join the list of countries integrating behavioural research into public policy, and fast

If behavioural interventions have the potential to increase the efficacy of our social spending, what are we waiting for? Photo: MintPremium
If behavioural interventions have the potential to increase the efficacy of our social spending, what are we waiting for? Photo: Mint

US President Barack Obama’s executive order asking US agencies to integrate ‘nudges’ in their daily operations is the clearest sign that behavioural public policy is here to stay. The order (available here) adds the US to a group of countries including the UK (Behavioural Insights Team), Australia (NSW Behavioural Insights), Singapore (Behavioural Insights and Design Unit, see here and here), and institutions like the World Bank (2015 Report on Mind, Behaviour and Society) who have been using and advocating behavioural research to dramatically improve public policy design, and deliver better outcomes for taxpayer money.

To those of us following the progress in this field with interest, it is clear that India needs to join the list of countries integrating behavioural research into public policy, and fast. Especially because India lags behind most developing countries in expenditure on social welfare, it is crucial that India’s policy makers squeeze the most value out of every rupee allocated to a welfare programme.

But what are nudges? At a conceptual level, if you think of policy design as the map and development outcomes as the destination, then nudges can be the road signs that gently guide you towards the best route. Formulating these road signs requires expertise at two levels:

i) understanding why consumers pick less optimum routes (cognitive biases)

ii) designing signs that guide users to better routes (nudges/interventions).

Nudges and other behavioural change interventions primarily rely on design and messaging that address the effect of behavioural biases on human behaviour.

These biases are no unique phenomenon in government and public policy, neither do they affect only a small percentage of the population—cognitive biases are everywhere! Take for example the IKEA effect (named after the do-it-yourself Swedish furniture retailer). This bias leads to us placing a disproportionately high value on ideas or products that we had a hand in creating. The bias can prevent us from recognising early on that our much-valued product isn’t working well, or make us closed to ideas from elsewhere since we’re attached to the home-grown idea. Another common bias that we face on a daily basis comes from the psychological theory of framing—where the construction of a sentence or situation changes your perception or reaction of it (reactions in newspapers to the latest census results on religious groups are an excellent example of framing).

Do such interventions work? If planned carefully, and backed by accurate bias-targeting, then yes. For example: in Israel, the issuing or renewal of an ID, passport or driving license, became conditional upon answering the question of becoming a registered donor. The default option was an ‘opt-in’ provision, which greatly increased the list of registered donors by targeting the status quo bias. Similarly, in Singapore—known for a number of innovations in governance—providing the average electricity usage of the locality on the back of bills has nudged households to think about their own energy consumption, driving them towards reducing it to the average levels, an example of the groupthink effect.

It might be argued that these are rather narrow and first-world interventions that hold no relevance for the Indian polity, but even at a first glance, there is much that policy in India can adapt and use from these research findings. The colour-coded footprints in Delhi’s metro, guiding users to the correct metro line, are only a short step away from Copenhagen’s experiment of using green footsteps to lead to trash bins (helped reduce littering by 46%). Research by Final Mile, a Mumbai-based firm, suggests that using fictionalized photographs of a person getting run over by a train reduced incidences of railway-related deaths significantly at unmanned crossings—something that the railway ministry and union railways minister Suresh Prabhu might consider implementing as a pilot.

In another example, the ministry of petroleum and natural gas can surely benefit from nudges that encourage large-scale signing up for organ donation, and rework the ‘give it up’ policy for cooking gas subsidy on that basis. Eldar Shafir and Sendhil Mullainathan’s research on the “scarcity effect"—where devoting all your energy to a single (often pressing) resource can cause poor cognition in other areas—has direct relevance to financial inclusion for bottom-of-pyramid consumers. It is very likely that these insights may be useful to the policy makers managing the Pradhan Mantri Jan Dhan Yojana.

Ultimately, the progress of our country depends on government policies adapting and addressing the developmental challenges facing millions of our fellow citizens. The government already uses choice interventions like subsidies and taxes to shape citizen behaviour. Understanding cognitive biases correctly, and formulating interventions that take into account such biases can have a huge impact on making public-spending more effective. As an added bonus, India can make use of this opportunity to lead the way in pioneering behavioural research in South Asia, focusing on the policy challenges unique to this region. ‘Made in India’ nudges, anyone?

Put simply, if behavioural interventions have the potential to increase the efficacy of our social spending, what are we waiting for? We need action on this front from a government elected on the platform of agility and progress.

India’s Nudge Unit is an idea whose time has come.

Part 2 will focus on highlighting successful nudge research that could be adapted to the Modi government’s flagship programmes. Part 3 of this series will lay out a roadmap for the nudge unit in India.

Sowmya Rao is a partner at law/policy firm Mudita Advisory, and founder of civic tech startup Nagara and Anirudh Tagat is Research Author at the Department of Economics at Monk Prayogshala, a not-for-profit academic research institution.

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Published: 17 Feb 2016, 02:33 PM IST
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