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Nudging India forward: The case for a nudge unit In India
'Nudging' refers to altering the decision-making environment in the context of biases and 'irrational' behaviour that decision-makers often display
In our earlier post, we introduced and detailed a novel approach to public policy that takes cognisance of cognitive and behavioural biases that individuals often fall prey to. This approach, commonly referred to as ‘nudging’, refers to altering the decision-making environment in the context of biases and ‘irrational’ behaviour that decision-makers often display. We have seen how countries like Israel and Singapore have benefited from interventions that target predictable behaviour of individuals. In this article, we will deal with specific examples from other countries (as well as India) to highlight how nudges can be implemented in the Indian context.
Three examples of nudges in other countries that can be adapted to India:
Nudging People To Vote (America)
In last year’s Bangalore municipal elections (BBMP) on 22 August, the voter turnout was a major issue of contention. Up until the afternoon, only 21.2% of all registered voters had shown up, ultimately settling at less than 50%. Many claimed that this was further hampered by inclement weather conditions, and on account of voting taking place during the weekend. One common strategy that media outlets use is to emphasise the low turnout, and sometimes even have popular celebrities cast their vote to make an impression on those who have decided to sit it out.
If citizens are to be incentivised to take part in the democratic process, nudging may offer innovative solutions to improve voter turnout. Take for example the case of state elections in New Jersey and California in 2005 and 2006, respectively. A phone campaign experiment was used to convey two separate messages to encourage registered voters—one which said that voter turnout was expected to be low (the control group) and another that said the voter turnout was expected to be high (the treatment group). Imagine receiving a phone call that said nearly everyone in your apartment complex was expected to vote—and you were planning not to. How would you spend the rest of your day?
The experiment found that this high-voter turnout communication influenced infrequent and occasional voters to be 7% more likely to vote. If such a communication strategy was implemented jointly by the Election Commission as well as eager media houses, perhaps we would be able to nudge people to vote more regularly.
Other schemes that have been used in India to incentivise people to vote is by providing them discounts at retail outlets and restaurants. There is little empirical evidence available regarding the success of such market-based interventions, but perhaps they add value to taking the effort to vote, and can be seen as a reward-based approach to improve voter turnouts.
Nudging people to not litter
India generated more than 100,000 tonnes of solid waste per day in 2011-12, which on a per capita basis works out to more than 100 grams of waste per person per day. Turns out that India is next to the United States and China not only in gross domestic product, but also in waste generated. Common public health and hygiene problems in India relate to open defecation, public urination, and poor civic sense when it comes to littering. Can Prime Minister Narendra Modi’s Swachh Bharat Abhiyan bring about any real change by simply throwing money at the problem? Even actor Vidya Balan’s pleas to rural households to build toilets appear to be missing the point: at the heart of each of these issues lies a behavioural problem that stems from cultural and social norms—one that can be addressed by nudging at an individual level.
Various interventions around the world have attempted to tackle poor sanitary practices as well as littering. One idea to prevent public urination (which is believed to be widespread but no consistent data is available) is to coat walls with paint that repel any liquid substance, and ‘splash-back’ to the offender. In India itself, a common way of preventing it is by installing religious and/or cultural imagery, but there is little evidence to point toward its efficiency (if any).
ThinkScream, a Mumbai-based company, proposed WiFi garbage bins to provide an incentive (free WiFi) for taking care of rubbish efficiently, another idea that may potentially nudge people to litter less, both abroad and in India. Nudging, therefore, might propose unique ways to dissuade the individual from taking a sub-optimal decision, without explicitly forbidding it (for example, a person who doesn’t want WiFi can still litter). An institutional mechanism to experiment with such solutions is therefore the need of the hour.
Nudging to pay taxes honestly and on time
Statistics on tax compliance are notoriously difficult to come by, so without spending excessive public resources on monitoring and scrutiny, governments can rarely correct problems of tax avoidance—both by companies as well as individuals. Poor tax compliance is a particularly worrisome case because it may dissuade taxpayers from continuing their compliance. There have been several efforts in the past year that the Indian government has taken to tighten tax compliance measures. For example, the Central Bureau for Direct Taxes (CBDT) is setting up a large database to mine all financial transactions in the country, a move that will bring greater scrutiny to all income tax assessments. But what is a non-intrusive way of getting an entity to pay its taxes on time and honestly?
A study by Michael Hollsworth (part of UK’s Behavioural Insights Team), John List, Robert Metcalfe (both at University of Chicago), and Ivo Vlaev (Imperial College London) provides interesting insights into what nudging can do for poor tax compliance. The authors studied the impact of different types of tax reminders on payment of tax for those who had declared their taxable income. They used five ‘norms’ to incentivise tax payments:
“(i) “Nine out of ten people pay their tax on time” (basic norm); (ii) “Nine out of ten people in the UK pay their tax on time” (country norm); (iii) “Nine out of ten people in the UK pay their tax on time. You are currently in the very small minority of people who have not paid us yet” (minority norm) (iv) “Paying tax means we all gain from vital public services like the NHS (National Health Service), roads, and schools” (gain); (v) “Not paying tax means we all lose out on vital public services like the NHS, roads, and schools” (loss)”
Similar to the nudge used to motivate non-voters to vote, the study showed that the minority norm had the largest impact on payment of tax, pushing up the likelihood of tax payment by nearly 5.1% (that’s an increase of £2.36 million in taxes collected in 23 days). This provides additional motivation to the CBDT, which is keen to provide a greater human interface to tax compliance
A simple idea is to have customized messages for different taxpayers, over and above the large-scale advertising campaigns that the Income Tax department currently runs. Perhaps the idea that individual-level engagement is far more effective than mass media communications concurs with a common psychological finding: that customized messages make people feel like they are engaged in a direct communication with another person.
Of course, these are only some of the areas in which the current government can effect large changes by incorporating insights from behavioural science. Other common problems that nudging might have solutions to include (but are not limited to) retirement savings and social security, regular attendance at school, reducing red tapism and corruption among bureaucrats, and decongesting traffic in India’s chaotic cities. As is evident, grappling with such problems requires an institutional approach, one that cannot easily be planned, implemented, and executed without the support of the government. This provides greater support to the idea that setting up a nudge unit in India is the need of the hour.
This is the second part of an ongoing series of articles exploring the feasibility of setting up a Nudge unit in India. The first part was ‘India’s nudge unit: An idea whose time has come’.The next and final part of the series will focus on the practical concerns related to setting up a 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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Business NewsOpinionNudging India forward: The case for a nudge unit In India
First Published:23 Feb 2016, 12:40 AM IST
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