India’s collective action trouble

We have a number of major collective action problems to confront when reshaping India. An obvious, important one which the government has identified is public sanitation, but the list is large: corruption, safety, public health, environmental pollution, and traffic problems. These are just a few examples of areas in which collective public action is required to change the prevailing state of affairs--this is as critical an input as government action.

Thinking about collective public action as distinct from effort on building and strengthening institutions is important. Too often, we focus our frustration with the existing state of affairs on external entities-- while government and politicians are favourite whipping boys, there is more to reconstructing an economy than their action or inaction.

In Indian policy circles, public institutions and state capacity have been the primary focus of most public commentators. But that is not the only issue--this knowledge has manifested itself in a number of political approaches, perhaps most recently in this Union government’s Swachh Bharat Abhiyan.

The importance of this issue of collective action and social norms as a complement to hard infrastructure-building is obvious. Anyone in India who has ever experienced the unwillingness of car-drivers to move their vehicles aside for ambulances carrying the critically ill to hospital despite the possibility of doing so, or has witnessed public urination in situations in which sanitation infrastructure is readily available has first-hand experience of its importance.

The idea that collective action is a critical input to a well-functioning economy has an ancient and illustrious history in a number of different intellectual areas. However, in economics, standard characterizations of agents’ incentives have long suffered from what Nobel prize winner Elinor Ostrom calls the “zero-contribution” thesis--the view that rational agents will not engage in cooperative behaviour (or “contributions”) in Prisoners’ Dilemma situations even if such cooperation generates mutual benefit. This thesis has important consequences for public policy, perhaps most importantly that the role of the state becomes paramount.

In a zero-contribution world, increasing enforcement and state action are the only solution.

Luckily, a large body of experimental evidence now suggests that the zero-contribution thesis is an inaccurate and too-blunt a characterization of human nature. As with all things, there appears a distribution of social contribution rates in the population. What’s more, it does seem like the average contribution rate is non-zero.

A few useful facts that Ostrom highlights about the body of experimental evidence are worth discussing. First, communication seems to matter--when participants are able to deliver “tongue-lashings” to others, social contribution rates rise. Actual confrontation appears to be far more effective than written messages. While this isn’t a call to administer public scoldings, there’s evidence to suggest these may be quite effective. It also suggests that having gifted public communicators in charge delivering messages about collective action could produce results even in a situation in which expectations are higher than delivery.

Second, participants in experiments are better able to sustain cooperation over multiple periods when they better understand the structure of the game they are playing. Repeated instruction continues to be useful--apparently repetition is the mother of knowledge even in social contribution situations.

An essential part of public communication in India, therefore, will be to ensure that if we have picked Swachh Bharat Abhiyan as our current theme, we need to continually emphasize the same theme over a substantial period of time.

Third, beliefs about others’ actions appear to be important--people are more likely to contribute when they believe that others will do so. This magnifies the impacts of seemingly small social contributions since they serve as signals to others. This also suggests that enlisting public figures and celebrities in social action is a smart approach.

Another study is instructive in this context. In a 2007 paper, economists Ray Fisman and Ted Miguel studied parking violations in New York by diplomats from a range of countries. During a period in which there was zero enforcement of these violations, they found that the rate of parking violations by foreign diplomats was highly correlated with corruption indexes of the countries from which the diplomats hailed. What’s more, the rate of accumulation of parking violations actually increased as time went on, especially for diplomats from low corruption countries. In other words, the low corruption norms of the home country diplomats (think Norway) disappeared over time in an environment of lawlessness. Of course, when the New York authorities finally clamped down, so did the parking violations.

Overall, it does seem possible to increase the average social contribution rate and to create systems which shame those with low contribution rates to increase contributions--a critical input into our reshaping of India. However the New York parking violations story offers a cautionary tale--constant vigilance is required to ensure that any progress we make is permanent rather than merely temporary.

Tarun Ramadorai is professor of financial economics at the Saïd Business School, University of Oxford, and a member of the Oxford-Man Institute of Quantitative Finance.

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