‘Nudge’ can help tackle India’s social problems
The Economic Survey, released by India’s finance ministry in July, counts as a genuinely historic document. A central reason is its superb discussion, in Chapter 2, of new ways to address serious social problems, ranging from public health to sex equality to tax compliance. The discussion draws attention to “nudges”: Relatively modest interventions that preserve freedom of choice but that steer people in particular directions. When the government provides people with health-related information, it nudges. A warning is a nudge. A reminder is a nudge. So is an emphasis on longstanding or emerging social norms.
As the survey notes, nudges are an outgrowth of the important field of behavioural economics, for which Richard Thaler won the 2017 Nobel Prize. Behavioural economists emphasise that humans beings are not computers, and most of us can use a little help. Sometimes we lack information. Sometimes our emotions get the better of us. Good nudges can give us the help we need.
Behavioural Insights Teams, sometimes called Nudge Units, can now be found in many nations, including Australia, Canada, Germany, Qatar, the United Arab Emirates, Japan, the United States, and the United Kingdom. Every day, their work is saving lives, reducing poverty, improving public health, reducing sex discrimination, and helping to clean up the environment.
The survey rightly emphasises that nudging and uses of behavioural economics are already playing a prominent and constructive role in India. For example, the Swachh Bharat Mission (SBM) has emphasised behaviour change in addition to the construction of toilets. It has succeeded in part because it has provided information, made the use of toilets more attractive, appealed to people’s emotions, emphasised new social norms, publicly celebrated Swachhata champions, and prominently connected the reform project to some of Gandhi’s teachings about cleanliness.
Another example is the Beti Bachao, Beti Padhao initiative, designed to address the decline in the child sex ratio and promote the empowerment of girls and women. A central goal has been to promote a social norm in favour of celebrating girls, rather than viewing them as burden. A key part of that strategy involved a good nudge: Iidentifying, and highlighting, the thousands of people who have been acting in accordance with that norm.
The survey rightly points to several other areas to which behavioural insights might be applied. Much more could be done to promote sex equality — for example, by simplifying processes in order to make it easier for women to report harassment and discrimination, and by emphasising and highlighting the many women who occupy important positions in the public and private sectors. If women (and men) see that women are occupying such positions, girls can be encouraged to aspire to do that as well.
For India, one of the most important areas for the use of behavioural economics involves public health, which could greatly benefit from a sustained focus on potential nudges. A great deal could be done to promote flu shot appointments and other vaccinations. Systematic steps could be taken to reduce anaemia and other illnesses. If the goal is to reduce the risk of diabetes and obesity, small design changes in cafeterias and grocery stores would promote healthier choices.
All this is just the tip of the iceberg. There is every reason to think that the uses of behavioural economics, and smart nudges, could produce major progress on many of the serious challenges in India today.
That is one reason that the survey concludes with a simple and powerful recommendation — “the proposal to set up a behavioural economics unit in the Niti Aayog must be immediately activated”. As it notes, the unit could and should work closely with state governments, helping them make their programmes more effective and informing them of the potential value of behavioural insights.
For those who are concerned about serious social problems, it is tempting to think that nudges are small steps — mere “tweaks.” But that’s a mistake. By any measure, the consequences of some nudges are not properly described as modest.
In Sweden, Vision Zero, using nudges and behavioural science, has been spectacularly successful in reducing deaths and injuries on the roads. As a result of automatic enrolment in free school meals programmes — a little nudge — over 15 million poor American children are now receiving free breakfast and lunch during the school year. In both Denmark and the United Kingdom, automatic enrolment in pension programmes has produced massive increases in participation rates. Those increases will enable people to have an easier time in retirement.
Simplification of regulations and forms can make it easier for companies to do business — and make it easier for everyone, including the poorest among us, to have access to life-changing benefits. It is true, of course, that by themselves, nudges cannot eliminate poverty or ensure economic growth. They cannot suddenly clean the air or guarantee every child a good education.
But here is a phrase that is becoming increasingly popular inside governments all over the world: “Better is good”. Denting the big problems counts as a major achievement. The Economic Survey points the way to doing exactly that.
Cass Sunstein is Robert Walmsley University Professor, Harvard. He is a former administrator of the White House Office of Information and Regulatory Affairs
The views expressed are personal