Nudge Policy Making: Meaning and Relevance for India

Published: October 20, 2018

In 2016, US President Obama asked US agencies to include nudges in their day-to-day operations. With that, the US has joined a group of nations such as the UK, Australia, Singapore and institutions like the World Bank who are using behavioural research to improve public policy and deliver better results.

In the same year, the Indian government’s think tank NITI Aayog announced its decision to establish a Nudge Unit similar to the Behavioural Insights Team in the UK. NITI Aayog had tied up with the Bill & Melinda Gates Foundation for the implementation. Nudge policy would benefit the flagship programmes of the government like Jan Dhan Yojana, Swachh Bharat Mission, Digital India etc.

What are Nudges?

Nudging, literally means, to push against gently. But in governance or economics, Nudges can be defined as the guide for the policy to achieve the desired outcomes. Creating these nudges needs expertise at two levels viz- Cognitive Bias (understanding the reasons for the consumers choosing less optimum routes) and Interventions (designing signs that guide users to best routes).

What are the benefits?

  • It helps in understanding people’s thinking, decisions, and behaviours.
  • It helps people develop their thinking as well as decisions.
  • To manage changes of all types.
  • Finding and altering existing unhelpful influences on people.

How does it work?

Behavioural economists have found that all types of psychological or neurological biases convince people to make choices that look contrary to their best. The idea of nudging is based on the theory that it is possible to make people take better decisions by showing them choices in different ways.

What is the experience of other countries?

  • In Singapore, providing the average electricity consumption of the locality on the back of bills has nudged or convinced households to think about their own energy usage, influencing them towards minimizing them to the average levels. This is an example of groupthink effect.
  • Copenhagen’s experiment of utilizing green footsteps to lead people to trash bins helped in the reduction of littering by 46 percent.
  • Singapore printed tax bills on the pink paper which is generally used for collecting debts resulted in a 3-5% point improvement in the prompt payments.

How is it relevant for India?

  • Using fictionalized photographs of a person getting run over by a train decreased railway-related deaths substantially at unmanned crossings, which should be considered by the railway ministry for implementation as a pilot.
  • Such interventions may also boost signing up for organ donation, and on that basis, make over the ‘give it up’ policy for cooking gas subsidy.
  • The government has already been using choice interventions such as subsidies and taxes to alter citizen behaviour.

Understanding nudging correctly and starting initiatives that consider such biases will make the public-spending more effective. Furthermore, India can make use of this opportunity to lead the way in pioneering behavioural research in South Asia concentrating on the policy challenges distinct to this region.

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