‘Nudge’ has been the buzzword in the business news since last month when the Economic Survey 2019 cited the need to use Nudges, like developed nations, as solutions to consumerist problems of the Indian polity. Ever since, we have seen multiple debates being conducted on the new channels and quite larger number of them in the drawing rooms and cafes. And now that the Prime Minister himself has given a hint, in his Independence day address to the nation, about the need to accomodate such behavioural economic theories in India’s Public Policy, chances of more discussions and cost vs benefit debates are for sure going to happen.
So,What is this million dollar idea that is talked about so much? Wiki defines Nudge as a concept in behavioral science, political theory and behavioral economics which proposes positive reinforcement and indirect suggestions as ways to influence the behavior and decision making of groups or individuals.
To understand this better, we must realize that our behaviour is not always in alignment with our intentions. Many a times in our lives, we might know what is good for us/society, but still end up not doing it. Even though, we would like to feel highly about our thoughts being rational, this behaviour of not acting in line with the intent due to common cognitive biases makes it clear that we are not fully rational beings. So a nudge makes it more likely that we will make a particular choice, or behave in a particular way, by altering the environment so that automatically our cognitive capabilities tend to favour the required outcome.
Richard Thaler , who revolutionized this idea of Nudging through his book (Nudge : Improving decisions about Health,Wealth and Happiness coauthored with Cass Sunstein ) defines nudge as anything that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid.
For laymen like us, he simplifies :
“Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not.”
“Persuading kids to eat spinach/vegetables by telling that they will look pretty/handsome on eating it is basic grannying.
But getting kids to eat spinach/vegetables by actually preparing a tasty curry out of it is nudging.”
Nudging is about how far we can go in making a fundamental shift in human behaviour without bans and laws. If studied and tweaked whenever and wherever required, governments/instituions can get people to do things that would meet it’s objective of social welfare. So in my personal opinion, the application of this behavioral theory in Public Policy design can bring about drastic changes if implemented smartly. As individual decisions can be influenced based on the way things are presented to them, the place where it is presented and the situation in which it is presented, we can actually start helping people to make better decisions without telling (‘preaching’ might be a bit harsh) them what to do.
We unanimously tend to agree on the need of minimum government interventions in our lives.So it is not always the government’s job to tell people what to and what not to do. Hence framing laws and bringing legislative orders to bring out change in the public behaviour never works anywhere, and in a diverse country like ours ,where opposing everything while in opposition behaviour is prominent, the chances are even smaller.
If the Policy Design is considered as the routemap to the desired destination of development, nudge can be described as the sign boards which guides us to reach the destinations. Then, the question to be asked is ‘How can we apply Nudges in Policy Making?’.
The basic framework of this theory speaks about the following ways :
1) Framing-How things are presented to the consumers?
* if we are to simplify the tax filing norms in the website with clear graphical instructions, studies shows that tax compliance increases.
2) Nudges – What are the ways in which we can influence people using product placements?
* if we are to place fruits and other healthy products near to the billing counter ,unlike chocolates or soft drinks, consumption of healthy foods amongst the customers will show a healthy improvement.
3)Default Choices – Unless people opt out formally, they are part of the plan.
* if people are automatically enrolled for pension schemes or organ donation schemes and given them an option to opt out via an application , the number of enrollments (with consent, unlike in the case of a law) will show an upward curve.
4) Restricted Choices – Restricting the number of choices available.
5)Mandated Choice – People have to make a choice one way or the other.
Hence ,bodies like Niti Ayog who works with the government in framing public policies could pass each of the required developmental objectives through these five choice architectures and analyse if there are any tweaks that could help in better participation/compliance of the policy. Not only governments , institutions like schools,colleges,corporate offices etc could also use these while working on issue fixes .To cut it down further, we can even use this on a personal level in order to make better choices and decisions in daily lives.
Before concluding, it is to be understood that, Nudges are not always replacements to mandates or laws. And like every law, it is not always guaranteed that the nudges will bring about drastic changes all of a sudden. More over, the human mind who feels high about their capability to think rationally, might find such tweats from the governments to infkuence our choices as forced parenting and hence outcomes sometimes are unpredictable .
However ,to conclude , 72 years since Independence and we have tried different theories and thought processes based on the political and intellectual biases of the law makers we voted for. And now that, we are seeing a will to try this Nudging behavioural patterns in our public policy frameworks ( Thanks to Nehru Ji), I am hopeful of seeing some results on the ground.
Follow the White Rabbit 