20 July 2019 08:21:45 IST

A long-time ‘deskie’, Baskar has spent much of his journalism career on the editorial desk. A keen follower of economic and political matters, he likes to view economic issues from a political economy lens as he believes the economic structure of a society is deeply embedded in its political and social ethos. Apart from writing the PolitEco column for BLoC, Baskar writes book reviews and articles on politics, economics and sports for the BL web edition. Reading and watching films are his other interests, though the choice of books and films are rather eclectic.  A keen follower of sports, especially his beloved Tottenham Hotspur FC, Baskar is an avid long-distance runner.  He hopes to learn music some day!

‘Nudging’ people to change

Using insights from behavioural economics was the Economic Survey’s big takeaway this year

For many decades, the Economic Survey , usually brought out by the government just before the Budget, were rather dull and boring documents. They were just a monotonous account of the economy’s achievements in various sectors, though they always contained a wealth of data.

Of late, things have changed for the better. The Economic Survey has now become more of an ‘ideas’ document than an official record of the economy’s performance over the year. Things began changing when Kaushik Basu took over as Chief Economic Advisor to the Finance Ministry in 2009. The language as well as the presentation improved remarkably with extensive references to academic economists and their work. Also, apart from presenting the economy’s record, the Survey also started presenting new ideas for future policy formulation.

This healthy trend has continued since. Under Arvind Subramanian’s tenure as Chief Economic Advisor, his first Survey had an extensive chapter on the JAM trinity — Jan Dhan Yojana, Aadhaar and Mobile number. This unique “trinity” was supposed to be a novel method to deliver social benefits to the poor and curb “leakages”. JAM was to ensure that only the needy and deserving got the benefits of the various government schemes and that they were not siphoned off by the undeserving.

In his second Survey , he made a fervent pitch for a Universal Basic Income scheme. The idea here was to wind up many of the unproductive and financially draining welfare schemes and give a basic income to all people. There were though some conditions attached, surely not all the people would be eligible for this. The idea of conditional income transfers was also explored in this Survey. Though this idea remained controversial, the fact that the Centre and several State governments now give cash transfers to farmers — PM-Kisan scheme, Telangana’s Rythu Bandhu scheme and Odisha’s ‘Kalia’ — shows that the idea of direct cash transfers had gained currency.

In this year’s Survey , Chief Economic Advisor Krishnamurthy Subramanian has extensively used the ideas of behavioural economists such as Richard Thaler and Cass Sunstein to tweak people’s attitude to achieve better outcomes. In fact, the chapter borrows its title ‘Policy for homo sapiens , not homo economicus ’ from a paper by Thaler.

The CEA argues that people can be “nudged” into making right decisions, the assumption being that people usually tend to be ‘ status quoist ’. The best of economic and welfare policies often fail at the ground level due to a variety of factors, including social norms. The CEA argues that two government schemes — Swachh Bharat and Beti Bachao, Beti Padhao — have gained a great deal from the insights behavioural economics offers. The concept of “nudge” lies between laissez faire and incentives. Though “nudge” assumes a paternalistic state it also gives people room to make their own choices.

According to Subramanian, under the Swachch Bharat Mission, not only were toilets constructed in villages, it was ensured that they were used. This entailed a change in attitude. According to the Annual Rural Sanitation Survey 2018-19, “93.1 per cent of rural households had access to toilets, and 96.5 per cent of the households in rural India that have access to a toilet use it.”

But how did this attitudinal change to end open defecation come about? More than five lakh swachhagrahis were recruited. Every village had at least one swachhgrahi , who is literally a foot soldier of the Swachh Bharat Mission. These swachhgrahis leveraged their social ties with the villagers to bring about change in their sanitation habits. Socially they were agents of behavioural change.

Another important scheme was Beti Bachao, Beti Padhao, which aimed at arresting the abysmal and tragic sex ratio at birth rate in the country. The scheme, initially launched in 100 districts in 2014-15, now covers all districts in the country. According to the Survey, thanks to this scheme, large States such as Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Andhra Pradesh and Jharkhand have managed to reverse the falling sex ratio trend prevalent in the 2001-11 decade. Here, again, the attitudinal change towards the girl child was crucial in their welfare and, indeed, survival.

The Survey rather grandly calls for a shift from Beti Bachao, Beti Padhao to BADLAV — Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi — to transform gender equations and bring about equality. It refers to a whole lot of Hindu mythological characters to drive home the point of gender equality.

The Survey says that insights from behavioural economics can be used to bring about greater tax compliance too, and making the affluent give up subsidies.

So, the seemingly gentle “nudge” can bring about major social transformation.