4 min read.Updated: 14 Jul 2019, 09:05 PM ISTSumita Kale
Companies need freedom from the sludge of 58,000-plus compliances they have to face each year
Now that India’s policymakers have taken on board Richard Thaler’s principle of nudge, it is time to get them moving faster on another track he has been advocating recently—removing sludge. Intuitively, both terms are easy to understand. A nudge gently pushes people to make the right choice, without restricting their free will. On the other hand, sludge is anything that makes it harder for individuals to make the right choice, anything that curbs what he calls “wise decision making". So, for instance, a default-checked opt-in box for insurance while booking a flight online is a nudge; it encourages the flier to choose the right option of insured travel, but also allows him an easy one-click choice to opt out. However, if we have to fill forms with many details, and the terms of the deal are set out in complex language, it is more convenient to take the risk and skip being insured—the sludge here prevents people from doing the right thing.
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