Economic Survey sets agenda to bring about behavioural change
4 min read 04 Jul 2019, 01:11 PM ISTSuccess of schemes such as Swachh Bharat, Ujjwala is testimony to potential for behavioural change, says SurveyThe Survey said the Swachh Bharat Mission had resulted in the improvement of key primary health indicators
PremiumNEW DELHI : The Economic Survey 2019 has drawn on Nobel Laureate Richard Thaler’s Behavioural Economics Theory to lay out what it describes as an “ambitious agenda" for behaviour change that will bring in social change, which in turn, will help India transit to a $5 trillion economy by 2024-25.
The Survey, tabled in Parliament by finance minister Nirmala Sitharaman on Thursday, and authored by chief economic adviser Krishnamurthy V. Subramanian, said flagship programmes initiated by Prime Minister Narendra Modi such as Swacch Bharat Mission, Jan Dhan Yojana and Beti Bachao Beti Padhao, “provide testimony to the potential for behavioural change in India". “The Survey, therefore, lays out an ambitious agenda for behavioural change by applying the principles of behavioural economics to several issues, including gender equality, a healthy and beautiful India, savings, tax compliance and credit quality," it said.
“Given our rich cultural and spiritual heritage, social norms play a very important role in shaping the behaviour of each one of us. Behavioural economics provides the necessary tools and principles to not only understand how norms affect behaviour, but also to utilize these norms to effect behavioural change," it added.
According to Subramanian, Swachh Bharat Mission (SBM) had resulted in the improvement of key primary health indicators–diarrhoea deaths among children under five years had reduced significantly in the past four years. Building toilets was a key feature of SBM.
Around 99.2% of rural India has got individual household latrines (IHHL) coverage in the last four years under SBM, which has had significant impact on health. For example, an estimated 140,000 deaths were reported due to diarrhoeal diseases in 2014. This has declined to about 50,000 deaths in 2017-2018. While diarrhoea accounted for 11% deaths of children under five in 2013, an independent survey claims it is around 8.6% now.
Districts with low IHHL coverage suffered more from diarrhoea, malaria, still births and low birth weight, when compared to districts with high IHHL coverage—indicating that lack of sanitation and hygiene are the primary reasons for these health problems, the Survey said.
“The major finding of this analysis was that all these health indicators improved significantly in both groups after the implementation of SBM," the report added. For still births, too, the numbers showed significant improvement in districts with more toilets. Low birth-weight cases also declined with higher SBM coverage.
With improved sanitation and 100% open defecation free (ODF) areas, diarrhoea cases reduced significantly across Gujarat, Tamil Nadu, West Bengal and Bihar. Going forward, the Survey said, SBM needs to incorporate environmental and water management issues for sustainable improvements in the long term.
Among the successful programmes to introduce behavioural change was the Ujjwala scheme, which sought to move from incandescent to LED bulbs to promote energy efficiency, among other benefits. Another example was the subsidy “Give It Up" campaign, under which the Modi government encouraged “above poverty line" households to voluntarily surrender their LPG subsidies. For every household that contributed, a below poverty level household was promised a gas connection.
“The lack of economic incentives in this programme means the campaign relies entirely on the better judgement of people to voluntarily give up their subsidies," the report said, providing statistics to show how the campaign “heralded a significant change in the form of voluntary giving up of subsidies". “While this represents a good beginning, the potential to expand this number remains large," it added.
“In fact, ‘Give It Up’s task is less arduous than Beti Bachao, Beti Padao and SBM—while the latter programmes required continuous effort to dislodge mind-sets that prevailed for decades, ‘Give It Up’ requires only a one-time action that is inconsequential to most affluent households," the Survey said.
“Behavioural economics tells us that even if people are truly interested in giving up their subsidies; their actions may differ from their intent as they need to be moved to action with a gentle nudge." The Survey said “nudge policies gently steer people towards desirable behaviour while preserving their liberty to choose" and the government was planning to go ahead with the programmes to usher social change.
The Beti Bachao Beti Padhao campaign will also be scaled up to Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi to represent the “change" towards gender equality, the Survey said.
The contentious issue of tax evasion also found a mention. Research across countries show that paying taxes was dependent on “tax morale", which is driven by vertical fairness (the perception that the tax is commensurate to benefits received from the government) and horizontal fairness (the difference in the taxes paid by various sections of society). “If these two perceptions were rectified, tax compliance would improve dramatically, the Survey said. Reducing corruption, discouraging conspicuous display of wealth and inculcating a sense of pride of being the highest taxpayer in a district would go a long way in ensuring behavioural change vis-à-vis tax compliance, it said.
