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Government Policies & Welfare Schemes

The neurologist, Antonio Damasio, once wrote, "A brain that can't feel, can't make up its mind". Examples abound where ostensibly rationally thinking human beings with perfect information and foresight choose collectively to defy the fundamental tenet of classical economics. They tend to succumb when the dessert cart trundles by, to the great consternation of economic theorists and clairvoyants. We all break our diets.

My own experience with policy and its delivery allows me to cite a few more such scenarios where pure economic policy-making crumbled at the event horizon - the policy was of little use to communities it was designed to help. As an implementer, I found programmes requiring normative behavioural change distressingly difficult to deliver, and admittedly, success was moderate.

Let's take the case of Swachh Bharat, a proverbial horse and water scenario. Building toilets and creating infrastructure has not proved to be enough to make people use them. Naming and shaming has met with limited success to change preferences here. In the absence of social disincentives with everyone indulging in the same behaviour, and the practice being a collective habit perfected over the years, something more than building toilets (mostly without water supply) needs to be done here.

Another of many such examples is the "win-win-win" incentive whorl created by our agricultural policy owing to the MSP guarantee to a limited number of crops, mainly rice and wheat. It's a winning scenario for farmers growing crops underwritten by the MSP. Fertiliser subsidies encourage more use and productivity in the short term - a win-win for both farmers and suppliers. Government procurement further fortifies overflowing FCI godowns, adding to our confidence of being sufficient in grain, adding the third win. In this system of self perpetuating incentivisation, where is the scope to wean away farmers from cereal crops towards cash crops and ensure a better agro-climatic fit?

So what is that new perspective? Let's understand through a few examples again. Singapore is so spick and span, they say, you could eat out off the road. Locals file at the Tokyo metro entry and exit in perfect straight lines like automatons without a prompt, every single day of their commute. In fact, Japan is so low on public misdemeanour, more force and resources are deployed for the community service bureau than the crime bureau in the National Police Force. People behaving well save these governments billions in enforcement costs. In another example of a government harnessing normative insight, the British government called in game theorists to help design auctions for 3-G mobile telecoms' operating licences in 2000, and ended up raising a cool $35.4 billion, exploiting the competitive gaming behaviour of the bidders. In short, understanding strategy requires a perspicacious look into social norms and habits, and into human behaviour guiding such norms and habits. Policy needs to be informed thus.

Guided by such principles, the British government now has a full-fledged "Behavioural Insights Team" (BIT) also called the "Nudge Unit" working with the Cabinet Office. The two mantras informing all policy are: If you want to encourage someone to do something, make it easy (here is a case for simplifying tax returns), and we can't do evidence-based policy without evidence (perhaps a case for more decentralised planning tailored to local needs). Their five-year old "What Works Network" to encourage the government to test new ideas is already available in some manner in an indigenous avatar of the PMO's website welcoming crowdsourcing of ideas for better insights and policy design. Another stellar example to emulate is the public connect network established by the Gujarat government through BISAG (the Bhaskaracharya Institute of Space-Applications and Geo-informatics), the brainchild of our prime minister. The institute has done great work in sustainable development and inclusive growth through communication, information and direct public connect.

The US too has an SBST Team (Social and Behavioural Sciences Team) in the White House, which conducts randomised controlled trials to test the effectiveness of federal policy. It has helped veterans make choices for better pension plans. It has also helped people to pay off their educational loans and also helped the IRS to increase tax compliance using simple nudges instead of hard (dis) incentives.

Policy design in India thus stands to gain by being behaviourally-informed especially in the realm of policy outcomes like clean India. Working in a normative space with communities, instead of an antiseptic economic sphere, shall ensure the achievement of desired policy outcomes in the long run while minimising costs to the exchequer. This calls for the inclusion of their choices and preferences in policy and using nudges, that is continuous subtle suggestions and subliminal prompts, so that behaviours that are beneficial are reinforced and those which are damaging are extinguished.

Remember, in the long run, we are all humans.

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