Nudge unit: a new tool in the policy toolbox

NITI Ayog has tied up with the Bill & Melinda Gates Foundation to set up a nudge unit that will work
towards bringing about behavioural changes and recommending policy corrections to help make the
programmes more effective.

Nudge Unit = It is officially known as Behavioural Insights Team which was first set up in UK to apply
nudge theory (behavioural economics and psychology) to try to improve government policy and services
while minimising expenditure.

What is a Nudge?

At a conceptual level, if policy design is the map and development outcomes as the destination, then
nudges are the road signs that guide you towards the best route.

Formulating these road signs requires expertise at two levels

Understanding why consumers pick less optimum routes (cognitive biases)

Designing signs that guide users to better routes (nudges/interventions)

Nudging refers to altering the decision-making environment in the context of biases and irrational
behaviour that decision-makers often display.

Why is a nudge unit required in India?

Toilets built at great expense are not used.

New variants of tuberculosis spread because patients do not complete the course of drugs prescribed by
hospitals.

Rash driving on roads kills thousands of people every year.

Parents do not immunize children even when it does not cost them anything.

This shows how behavioural quirks lead to public policy failures.

Hence, there is a need of behavioural public policy wherein behavioural research is integrated into
public policy.
Behavioural interventions can have the potential to increase the efficacy of social spending.

Public policy is often focused on the problems of market failure or state failure. Far less attention is paid
to the deeper problem of social failures.

Thus, the focus and direction of nudges should be influenced by individuals ideas and concerns about
their own behaviour.

Let us look at some examples to understand the nudging action

Nudge to vote

The average voter turnout in all elections (General, State and local) have not been encouraging,
especially the local level elections in India.

Nudging can be done by

Providing discounts to voters at retail outlets and restaurants.

Phone campaign experiment (of USA) where the registered voters are informed about high voter
turnout in their area and they must also follow the lead.

Of course, there is little empirical evidence of success of such interventions but perhaps they add value
to taking the effort to vote, and can be seen as a reward-based approach to improve voter turnouts.

Nudge to pay taxes-honestly and on time

Tax avoidance (by Individuals + companies) is a problem which leads to poor tax compliance data.
Government spends excessive resources on monitoring and scrutiny, yet the tax compliance statistics
are difficult and time-consuming to come by.

Instead, if IT department engages at individual level, a personalised approach has high chances of
increased tax compliance than mass media communication.

Nudge people not to litter

India generated more than 100,000 tonnes of solid waste per day in 2011-12, which on a per capita basis
works out to more than 100 grams of waste per person per day.

Common public health and hygiene problems in India relate to open defecation, public urination, and
poor civic sense when it comes to littering.

Flagship programmes like Swachh Bharat Abhiyan will have little success if it is expected that providing
money will lead to open defecation free India in 2019! What requires is to have basic societal,
community and individual level understanding why toilets are not built/preferred.

Innovative experimental Ideas like religious/cultural imagery on public walls to prevent urinating and
spitting, wifi garbage bins where free wifi is provided for taking efficient care of rubbish, star ads
focussing more on changing the attitude than just promoting building of toilets etc. can be torchbearer
in cleanliness campaign.

Other nudges

Colour-coded footprints in Delhis metro, guiding users to the correct metro line helps the commuter
immensely.

Immunization rates in some Rajasthan villages climbed after free lentils were given to women who
brought their babies to local dispensaries.

Using fictionalized photographs of a person getting run over by a train reduced incidences of railway-
related deaths significantly at unmanned crossings

Hence, this is just a beginning towards a new approach for effective implementation of public policies.
The nudge unit is expected to recommend changes in advertising, financial outflow and other softer
elements related to the success of the programmes like Swachh Bharat, Jan Dhan Yojana, Digital India
and Skill Development through social messaging and new ad campaigns.

Limitations of nudge units

A nudge unit can help the government deal with human behaviour and social realities challenges but
there are limitations:

Behavioural sciences may design better social sector programmes but they are of limited use unless
bigger challenges like rapid economic growth, poverty reduction and macroeconomic stability are
addressed and solved effectively.

It may fall prey to paternalistic view that planners know better than citizens.
Behaviour patterns vary in different states. Policy formulation based on one/certain behavioural
approach may not go down well with all states.

Conclusion

The most well-intentioned social interventions fail because of the ground realities that policymakers
often fail to grasp.

Understanding cognitive biases correctly and formulating interventions that take into account such
biases can have a huge impact on making public-spending more effective. It will compel the ministries to
make constant back-end policy corrections.

Behavioural scientists have shown that people value loss avoidance more than gain acquisition. Hence,
loss norm can be followed to induce people to take advantage of public policies crafted for them. (Loss
norm= disadvantages due to non-following of public welfare policies)

The government already uses choice interventions like subsidies and taxes to shape citizen behaviour.
However, more institutional mechanisms are needed to advocate behavioural research to improve
public policy design and deliver better outcomes for taxpayer money.