Published in The Financial Express on Thursday, 3 December 2015
Behavioural intervention in public policy
Since 1993, the government of Bangladesh has been implementing “food for education” programme to minimise primary school dropout by school feeding together with take-home rations. As of today, the quantifiable impacts of this programme on enrolment, attendance and dropout are found to be evidently significant.
The economic and psychological aspects of these policy instruments are pretty straightforward. In poverty dominated rural areas, most poor households have been incentivised by the opportunity cost they generally expect from their children through household and other economic engagements. Likewise, those families also treated primary education as a social prestige. In theory, psychological notions of these instruments are commonly known as “behavioural intervention”. A small but significant number of countries show a growing interest in employing several behavioural interventions because of its cost-minimising, time-saving, and highly effective nature as a public policy instrument where common traditional approaches are found less functional.
Behavioural public policy interventions use -both internally and externally – authenticated tools and techniques based on the insights from behavioural and experimental economics, and scientific evidences in public policy-relevant settings.
Over the past few decades, micro evidences on behavioural interventions are meaningfully advanced, and success stories are plentiful. The most popular example of behavioural intervention is probably the use of “nudge”. It argues that positive suggestions and indirect reinforcements can influence people to adopt beneficial decision making approaches. In a natural field experiment, for example, a group of households received a letter showing the extra kilowatt of electricity they generally consumed, above that of their neighbours in Minnesota, USA. The letter, as a tool of ‘nudge’, produced around 2.0 per cent decrease in electricity consumption on average, compared to the baseline.
Another highly cited example is “opt-in” policy for organ donation. In some countries like France, organ donation rate is very high because citizens are automatically enrolled. If anyone wishes not to donate, it requires a formal de-registration, one that is time-consuming, which has resulted in such a high rate! However, these types of interventions have critiques from ethical background; but usually these generate expansive social welfare.
In Bangladesh, applications of behavioural interventions are not infrequent, but it holds little attention to the policy makers, academics and researchers. In recent years, a group of researchers led by Yale University and affiliated institutions have administered several experiments across the country to analyse individual and social behaviour in diverse contexts — for instance, sanitation, efficient cooking stove, tax evasion, seasonal migration, and livelihood of female garment workers. The results show behavioural interventions are found to be more effective together with traditional policies. Thus, it can be argued that the prospects of behavioural interventions in public policies would more likely be functional.
These interventions can be implemented to reveal actual social and economic problems for formulation of national and other development agendas like Sustainable Development Goals. Such tools can be used in a broad range of issues like school dropout, women empowerment, environmental protection, social safety, blood and organ donation, social trust, mutual cooperation, charitable activities, disease prevention, dispute resolution, minimum wage, unemployment, agricultural input subsidy, technology adoption and diplomatic bargaining, among others. Moreover, properly designed behavioural tools have been found effective to lower tax evasion, share market manipulation, traffic congestion, juvenile crime, corruption and so forth. Recently, the World Bank has reported six priority areas, including poverty dynamics, early childhood development, financial literacy and inclusion, performance and productivity, health care, and adaptation to climate change as future areas of research where behaviourally informed instruments can be used.
Clearly, this approach has at least three key policy implications. First, the government and the affiliated ministries may consider behavioural approaches for facilitating public policies, especially for the socio-economic programmes, as appropriate. Since these interventions are relatively new in Bangladesh, additional funding from national and international agencies can facilitate related experimental research to build a knowledge base and a research data centre.
Second, interdisciplinary research considering the insights from traditional and behavioural economists together with sociologists and political scientists are of special significance. Additionally, insights of psychological anthropology can also improve the potential of behavioural instruments as it can reveal the complex interactions of people’s behaviour and culture.
Third, like many other policy instruments, behavioural tools also have certain limitations. Nudging the same instrument like default option may affect people’s personal choices and interests. Therefore, a comprehensive guideline for positive behavioural research, planning and interventions is essential.
In the short-run, impacts of behavioural public policy interventions may be less functional, but these are likely to generate widespread positive results in the long run.
The writer is graduate researcher at the University of Nebraska-Lincoln, USA; and senior research associate (on study leave) at the Centre for Policy Dialogue, Bangladesh.