Economic Survey 2019: Of Gods, Gandhi, myths & ‘mental models’

NEW DELHI: The Economic Survey gives star billing to behavioural economics and the importance of policy ‘nudges’, asking for a ‘Nudge Unit’ to be set up in Niti Aayog. Uniquely perhaps even in the recent tradition of presenting big ideas in surveys — both Kaushik Basu and Arvind Subramanian did it — chief economic adviser Krishnamurthy Subramanian emphasised the importance of social, cultural and religious norms in producing “desirable” behaviourial changes and therefore “desirable” macro outcomes.

The survey points to a number of mythological and traditional motifs, discusses in detail Mahatma Gandhi’s concept of “seven social sins”, and gives examples of “moral” behaviour from Hindu, Islamic and Christian traditions.

The core of this idea is laid out in the survey’s Chapter 2 — “Policy for Homo Sapiens, Not Homo Economicus: Leveraging Behaviourial Economics of Nudge”.


‘Behavioural Economics’ Audit
Arguing that insights from behaviourial economics can help nudge individual behavior – on savings, on buying health insurance, on using right inputs in farming – towards better outcomes, the survey calls for institutionalising this way of thinking. It recommends a “behavioural economics” audit for every government programme before implementation.

Pioneered by the United Kingdom which set up a Behavioural Insights Team, popularly known as the Nudge Unit, in 2010 to apply behavioural economics theory to public policy, this idea draws on research by Nobel Laureate Richard Thaler who proposed that ‘nudge policies’ gently steer people towards desirable behaviour even while preserving their liberty to choose.

The Survey says the success of the Swachh Bharat Mission and Beti Bachao, Beti Padhao scheme as well as the impact of the “give up LPG subsidy’’ scheme already show that ‘nudge’ can work in India.

Chapter 2 then further elaborates on the idea of “good behavior”. “India @75 is envisaged as a ‘New India’ where every individual realises his or her full potential and looks for opportunities to contribute rather than claim entitlements,’’ the Chapter says, laying out a key behavioural change.

The survey talks of using religious custom, social norms and cultural traditions to make people pay taxes, keep young people away from alcohol and drugs and engineer gender equality.

“Behavioural economists have long touted the power of the social norm,” the Chapter says, adding, “…most people want to behave or be seen to behave in congruity with these norms. The fear of community scorn, or a desire to fit in, or both, have led many to renounce open defecation.’’ The survey also argues the success of BBBP was linked to the adaptation of the message to match the “mental models” of people. The choice of Panipat in the battle against the socially ingrained bias against the girl child was also “symbolic through the association with the famous battles fought in 1526, 1556 and 1761’’.

In the next stage of the gender equality campaign, the Survey proposes the use of culture and tradition. The concept of Ardhanareshwar – half malehalf female representation of Lord Shiva – examples of super-achieving women such as the prophetess Gargi, who questioned the origin of all existence in her Vedic hymns, and Maitreyi, who rejected half her husband’s wealth for spiritual knowledge, could be used to reinforce the message of gender equality, the Survey says.

“Men in ancient Indian society were identified with their mothers, Yashoda-Nandan, Kaushalya-Nandan, Gandhari-Putra, as well as their wives/consorts, Janaki-Raman, Radha-Krishna. Since such positive mythological insights about gender equality are readily available and deeply understood in Indian society, these can be used as part of a revolutionary BADLAV programme.’’ Given the importance of religion in Indian culture, the principles of behavioural economics need to be combined with this “spiritual/religious norm” to reduce tax evasion and wilful default, the survey argues.

It elaborates by referencing various religions: In Hinduism, non-payment of debts is a sin and also a crime. The duty or obligation of a child to repay the debts of the deceased parent is rested upon a special doctrine, known as ‘The Doctrine of Pious Obligation’.

Islam says a person cannot enter paradise until his debt is paid. All of his wealth could be used to pay the debt and if it is insufficient, then one or more heirs could voluntarily pay for him.

The survey also quotes the Bible: “Let no debt remain outstanding except the continuing debt to love one another’’ and “The wicked borrows and does not repay, but the righteous shows mercy and gives”.