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The Need to Incorporate Behavioural Insights While Framing Public Policy in India

Public Policy
Sep 25, 2020 9:14 AM 4 min read

In 2019, India’s flagship economic policy vision document - the Economic Survey of India - contained a whole chapter on policymaking titled ‘Policy for Homo Sapiens, not Homo Economicus’. It concluded with the words:

The proposal to set up a behavioural economics unit in the NITI Aayog must be immediately activated.

In simpler terms, it conveyed the fact that in practical life, people react very differently than economic theories state. Therefore, it is beneficial for researchers and policymakers to take into consideration behavioural science data of consumers and the target population while formulating policies.

In Economics, it is assumed that every individual/consumer behaves rationally. For instance, say there are two options, A and B, where A is the more optimum of the two, but it is observed that in some cases, numerous people still choose option B. Illusions, perceptions, marketing of a product and other confounding variables that are not visible to the naked eye and the brain mislead the individual into taking such a decision.

This is where the significance of behavioural economics and psychology is seen as it takes into consideration the psychology of human beings and ‘nudges’ them towards the option that gives them the best economic and social gain. 

Behavioural Policies around the World

Singapore is known for several innovations in governance. By providing the average electricity usage of the locality on the back of bills, it has successfully made households rethink their own energy consumption, driving them towards reducing about 4-12% electricity and possibly even higher. This was an example of using the groupthink effect to guide consumers towards a sustainable future. 

The colour-coded footprints in Delhi’s Metro, guiding users to the correct metro line, are only a short step away from Copenhagen’s experiment of using green footsteps to lead to trash bins (helped reduce littering habits by 46%).

The Need To Incorporate Behavioural Insights While Framing Public Policy In India

In India, companies like Final Mile and Briefcase are deploying behavioural sciences to support their businesses and policymaking. On average, eight deaths are recorded daily at unmanned railway crossings, which makes it a serious problem. Final Mile, a Mumbai-based firm, suggests that a yellow line drawn along railway tracks has reduced deaths by 75%. This is both easy to implement and budget-friendly. The Bleep experiment to curb honking conducted by Briefcase has shown encouraging results with a 61% drop in honking behaviour.


Introducing Behavioral Approaches to Governance

Incorporating behavioural sciences in policy-making is a two-fold process. We need to:

  1. Define and understand the cognitive biases that lead consumers to choose less optimum routes.
  2. Design and apply external stimuli that guide users to the best option. These stimuli are known as nudges or interventions.

This method is tried and tested - by governments, companies and international bodies. Dating back to 2010, the United Kingdom became the first country to introduce a ‘Behavioural Insights Team', a nudge unit set up in the Prime Minister’s Office. This phenomenon has now expanded to 202 government institutions including bodies in the United States, Australia, Singapore and even international bodies like the World Bank. 


Why Does India Need Behavioural Economics?

Some may ask, what is the urgent need for a structured and concrete nudge unit in India? 

Well, India is considered a low-income country and lags behind most developing countries in terms of expenditure on social welfare. Hence, it is extremely crucial that India’s policymakers squeeze the most value out of every rupee allocated to welfare and development programmes. Moreover, implementing some of these could be relatively easy and low cost if done at a micro-level, however new policy experiments require confidence and conviction to the pilot, which might take time

Talks about a nudge unit in the country have been ongoing since 2016, when NITI Aayog reportedly collaborated with Bill & Melinda Gates Foundation (BMGF) to provide insight into flagship programmes of the current government  such as Swachh Bharat Mission, Jan Dhan Yojana, Digital India etc.

Since then, announcements have been made about recruiting behavioural scientists and economists, but no concrete steps towards the creation of a structured unit under NITI Aayog have been taken. Similar steps have been planned by the state governments of Maharashtra and Punjab but those as well have been stonewalled so far.

It is time India utilises behavioural approaches in order to implement policies in a better manner. It is time for India to get a structured and concrete nudge unit.


Written by Anvi Agarwal, ‘In My Opinion’ Scholar, Moolya Foundation

Disclaimer: Views expressed are personal


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