Home / Companies / People /  India could soon be world leader in uses of behavioural economics: Cass Sunstein

Cass R. Sunstein, the Robert Walmsley University Professor at Harvard and co-author of Nudge with Nobel prize winner Richard Thaler, was recently in India. The former head of the ‘nudge’ unit in the administration headed by US President Barack Obama took time off his schedule, which included a public lecture in New Delhi, to speak on a range of issues including how India was emerging as the best example of the use of behavioural economics to achieve public good. Edited excerpts of an interview:

What brings you to India right now?

I have been looking for an opportunity to visit India, one of the most important and vibrant areas of the world. The opportunities for improving health and safety are inspiring. And to be given an opportunity to come and then speak on some of these issues is a great honour.

You mentioned health and safety. Why?

India very soon will be the most populous country in the planet. And the health challenges even in small countries are real and therefore, larger the nation, more the challenges the nation faces. And the opportunity of improvement in a country of this size, given level of creativity and ingenuity, is unparalleled. And this has become clear even in a day here that India could easily become, in the next three years, the world’s leader in the uses of behavioural economics to improve peoples’ lives.

What would you suggest as options for a country like India in improving health and safety on the roads? Will it be a carrot-and-stick approach?

I am not particularly interested in approaches that involve neither a stick nor a carrot. Nudges do not involve incentives of either kind. (Instead) If you give people information that ‘you take iron pills, you will reduce your risk of anemia’—that is not a carrot and not a stick; you are not offering them money, you are not threatening them with anything. If you simplify people’s ability to get access to toilets they become easier to find and use as a means of combating open defecation. It is neither a carrot nor a stick. At the same time though, you are right, there is a place for punishment and if people drive recklessly and endanger others, it is appropriate to say that is not allowed; have speed limits that are enforced. That is part of the tool box, but what I am particularly interested and what I have seen work in very diverse countries is more modest tools.

Behavioural economics assumes human beings are not rational and they are not unbiased. Right?

I would put it a little differently. I wouldn’t say human beings are not rational; that is not a very nice thing to say. (Instead) I would say that they are not fully rational. So, human beings just by nature tend to follow habits; that is not irrational but somehow they are not the best habits. Human beings tend to focus on today and tomorrow and not next year and next decade. There are probably good evolutionary reasons to focus on now. One way to put it is that people are rational but not calculating machines and they often fall into habits that are not in their interest. Good nudges if they come from a doctor or a government can counter our biases. One thing we did in the US government was to give everyone clarity on what they should be eating if they want to avoid certain health risks. And if people want to eat differently from the nudge, they are free to do that. But the clear information overcomes the biases that lead them unwittingly to eat in an unhealthy way.

But the biggest nudge comes with the graphic warnings on cigarette cases. I don’t see this nudge putting off smokers?

It is a good question as to whether a particular nudge works. Some don’t. If they don’t, then you should probably nudge better. Or maybe people are just going their own way and that is okay. In the cigarette context, the data we have from various countries is that graphic warnings tend to help; they reduce initial smoking and they increase quit rates.

What was the experience of setting up the nudge unit in the White House? Can it be replicated in India?

Absolutely. There are two approaches. One is to have a specific dedicated nudge unit. There is one each in Australia, Germany, Qatar, Saudi Arabia, the United Arab Emirates, Japan, the United Kingdom, United States and I could list many others. The experience varies from getting a small group of people, which could be as few as three, who have expertise in human behaviour, who can either use ideas that are highly likely to work and encourage one of the ministries to adopt it or it can be quite a large team that can conduct experiments: seeing if you can communicate with farmers, to have water conservation in this way and does it help. What about that way? What about a third way? And test and test and test. Once you know what works out and what doesn’t, you can scale it and use it in the whole country.

There is another approach and we have done that in US. One which can use behavioural strategies with or without experiments. This is one way of saying that you can do a lot of nudging without a dedicated nudge unit. As I say this, I am conscious that there is a good chance that India will be the most successful practitioner of behavioural science in three to four years. But just by the virtue of size and commitment (of the government), I think observers all over the world are very excited about the potential in India and one of the reasons for that excitement is the second chapter of the Economic Survey. No country in the world has done anything better; I think no country in the world has done anything as good.

What about the emergence of social media in the last 4-5 years? Is it a good tool to gauge public appetite for social change?

You can learn on social media what people are focusing on in terms of numbers and intensity. So, this is something that private and public institutions can learn about. It can be a tool for officials who can see that the public is very concerned about or not worried about anaemia. That can be instructive. It can be part of the set of tools that participants in democracy use and public servants consult. Of course, social media has a downside also. It can lead to unjustified fears or sometimes people stir themselves up about things that in a way is not very helpful.

In a country like India, there is an enormous digital divide even as a the framework of a binary public discourse clouds any trend. How does a behavioural economist sift through this noise?

When I was part of the US government, one thing I did not do was to look at Twitter in order to figure out what to do. So, I would be very cautious about what people in any country should do. But I am confident that the first thing to look at in the morning when you wake up, when you are trying to think about economic policy or about health is not Twitter.

Are you saying social media is not an ideal tool for behavioural science?

There are various things. If your focus is on dealing with open defecation— there has been an extraordinary achievement in making toilets available; this is one of the greatest public policy achievements anywhere in the world in the last quarter of a century. My understanding is that there has been substantial improvement in usage as well, which is also great. But the usage is not hundred percent and the goal for Clean India (Swachh Bharat) calls for steps to help people use what is available. This is a public policy challenge and that is probably not best solved by consulting social media. Maybe social media will tell you things that are useful to know about; what people are worried about; or what people are scared about; and in that sense, it can be instructive.

In my own country, people who have worked in White House communications office under any administration are interested in social media: What are people worried about. But for people who are working in the ministry of health, it is not their primary concern.

Anuja contributed to this story

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