Nudging in Policy Making

Global challenges, especially climate change requires long-term sustained behaviour change, from a consumerist lifestyle towards a simpler one with mindful consumption. However, it is a long drawn and complex process because many of our actions have become routine. Change requires people to think before every action, break their current habits, inculcate new ones consciously while simultaneously making a mental shift in toning down material aspirations that they have fostered over years. 

To change individual behaviour, policymakers can resort to behaviour science applications to understand how people process information and make choices. One of such behaviour science theory being put forward is Nudge.  

Nudge Theory is a concept rooted in behavioral economics, introduced by Nobel Laureate Richard Thaler and legal scholar Cass Sunstein. 

• Definition: A nudge is an intervention that maintains freedom of choice but steers people in a particular direction. 
• Choice Architecture: Nudge theory revolves around structuring the decision-making environment in a way that subtly guides people towards certain choices without restricting their freedom of choice. This structuring of decision-making environments is referred to as choice architecture. 
  • One of the key principles of choice architecture is setting appropriate defaults. With limited time and an increasing number of alternatives, individuals are likely to pick the default option given to them, and defaults can be used to promote better choices.

Nudging in public policy involves the use of behavioral science techniques to subtly guide people towards making decisions that are beneficial for both themselves and society, without eliminating their freedom of choice. By understanding how people process information and make decisions, policymakers can structure options in a way that steers individuals toward preferred outcomes.

2.1. What are the Applications of Nudging in Public Policy?

• Public Health: One of the most successful applications of nudging is in public health. Nudges can encourage healthier lifestyles and habits without requiring laws or regulations.
  • Example: Swachh Bharat Mission was one of the first policies with a focus on behaviour change. Within five years of being launched, household access to toilets increased to nearly 100 per cent in all states. Principles of behaviour economics were leveraged through the following actions:
    • Local ambassadors of change were engaged in every village to create a sense of solidarity around the initiative, since people tend to adhere to and emulate someone they know.
    • Participatory rural appraisal induced individuals to come together as a community to address the issue of sanitation collectively. 
      • For people who did not work with the collective or those who resisted, it served as a failure bias that elicited the fear of attracting the scorn of the community as well as a desire to fit in.
    • By attaching a sense of disgust to open defecation, SBM appealed to the emotions of the people, thus, moving people to change.
    • By invoking a sense of empowerment for girls and women, SBM has been instrumental in improving the literacy rates and, consequently, discouraging early marriage of girls.
• Environmental Policy: Nudging can promote eco-friendly behavior by encouraging people to adopt sustainable practices. Successful examples include: 
  • Organic Farming Sikkim - Including an understanding of organic farming in school curriculum helped inculcate sustainable farming practices from a young age.
  • Conserving Wetlands, J&K: Participation of local communities in conserving their regional waterbodies and wetlands. Locals are encouraged to join the movement through variety of awareness and informational campaigns and social media posts.
• Financial Security: Nudging has been used effectively to encourage savings and investment, particularly in retirement planning.
  • Example: By simplifying process of opening bank accounts, India’s Jan Dhan Yojana brought millions of people into the formal banking system.
• Civic Engagement and Compliance: Governments use nudging to increase voter turnout and civic participation.
  • Example: Sending voters timely reminders about election dates or automated and simplified tax forms.
  • Successful Example Social Practices: Women of Muala Sani village in Madhya Pradesh follow the traditional wisdom of conserving indigenous seeds and pass it down next generation.
• Education: Nudges are used in education to improve student outcomes by encouraging behaviors that lead to better academic performance.
  • Example: Simplifying the process of applying for student loan can increase college enrollment.
• Circular Economy: Nudging can promote environmentally responsible behaviors, such as recycling and reducing waste.
  • Example: Kala Cotton Initiative, Gujarat - It encourages sustainable fashion, working with marginalized communities, who live in water-scarce regions. Communities realized long term benefits of moving to indigenous cotton, which is pest resilient.

• Cognitive Bias: Psychologists have identified more than 150 cognitive biases. Our evolution has conditioned our minds to focus on what is immediately essential to our survival and not on complex long-term challenges that threaten our existence. 
  • We also tend believe that someone else will deal with the crisis (the bystander effect) and larger the group, the stronger this bias.
• Social Dilemma: In the climate debate, decision-makers face social dilemmas in which their personal interest may conflict with the common interest. 
  • Robert Gifford's general model of social dilemmas lists a number of psychological barriers to pro-environmental behaviour and explains these influences on decision-making. 
    • The identification of these barriers and the use of good models of human decision-making are key to designing successful behaviour change interventions.
• Environmental Citizenship Model by Hungerford and Volk: Behaviour change in individuals should take into consideration the level of the target audience in the environment literacy ladder. 
  • This model is a framework/scale that can be employed to tell if a citizen is at the entry level (is sensitive to the issue at hand), ownership level (has in-depth knowledge and takes ownership of making a change), empowerment level (has the skills and intention to take positive action) or has grown to be an environmentally responsible citizen.
• Ajzen’s Theory of Planned Behaviour: It states that the most important determinant of an individual's behaviour is their intent to perform that behaviour with three cognitive variables:
  • Attitudes towards Behaviour: Attitude reflect how positively or negatively an individual regards a specific behaviour; 
  • Social norms: Refer to the perceived social pressure to engage in the specific behaviour; and 
  • Perceived behaviour control: It is the extent to which they feel other factors, such as time, money, skills, ability etc., may influence their ability to perform a behaviour. 

This framework has been widely used to understand how attitudes toward behaviour contribute to predicting behavioural tendencies and has been frequently applied to the transport and diet domains in climate change behaviour research.

• Stern’s Value Belief Norm Theory: It explains that there is a chain of influence that controls an individual's pro-environmental actions. 
  • For instance, the greater adoption of reusable menstrual products, and building homes with earth architecture are likely because increasing number of people have a sense of obligation to take pro-environmental actions.
• Health Belief Theory: Beliefs help shape behaviour, and this theory suggests that when there is an increase in an individual's assessed level of risk, it is more likely that the individual will adopt recommended preventive behaviours. 
  • Variables to consider are perceived benefits of action and barriers to action. Model also considers demographic, socio-psychological and structural variables.
  • A stimulus is required to trigger the health promoting behaviour.
• Social Marketing: Social marketing emerged as a valuable behaviour change tool in the 1970s. Its main aim was to employ principles used to market consumer goods to market ideas, attitudes and behaviours. 
  • A social marketing campaign requires a clear understanding of the problem and the social, demographical, cultural, behavioural and structural dynamics influencing target audiences. 
• Roger’s Diffusion of Innovation Theory: It focuses on how ideas spread through a culture. 
  • It also highlights the importance of opinion leaders/influential change agents in the process and relies heavily on social capital.
  • To address our environmental problems, change must occur at a collective level, and models such as these help implementers identify the critical ideas and create required infrastructure.
• Voluntary Simplicity: Influenced by the Swadeshi movement during India’s struggle for independence, Richard Gregg proposed the idea of “Voluntary Simplicity”.
  • It means ordering and guiding our energy and desires, exercising partial restraint in some directions to secure a greater abundance of life in other directions. 
  • Gregg emphasized that living simply would significantly contribute towards cutting one’s share in the exploitation of natural resources and contributions to the detriment of the planet as a whole. 

• Limited Scope: Nudging can be effective for relatively small-scale, individual decisions (e.g., choosing healthier foods or saving more for retirement), but it may not address complex, large-scale societal problems like structural inequality.
• Tricky to implement: While nudging can have overwhelmingly positive effects, using it effectively is far from an easy task. 
  • Before introducing a nudge, one should consider many different factors, including the extent to which it could have a positive impact.
• Unexpected outcomes: Its outcomes are not always easy to predict. Even in cases where the behavioural effects of an intervention seem obvious, nudging can backfire and even lead to entirely opposite outcomes.
• Misuse: At times, nudging is implemented in ways that do not necessarily benefit individuals or consumers.
  • For instance, when devising deceiving marketing strategies that encourage people to buy a specific product.
• Manipulative practice: Some nudges rely on non-transparent measures that transfer responsibilities to citizens in ways that should be regarded as manipulative and thus as illegitimate strategies of public policy in democratic systems.
• Difficulty in Scaling Up: In large, diverse populations, implementing effective nudging interventions can be logistically complex and expensive.

• Transparency:  Empirical research suggests that individual commitments may increase if there were transparency in the information available on the commitments achieved by others in the community. 
  • This transparency of information helps create social norms and aspirations, as well as associated emotions of pride and guilt. 
• Positive framing: Research has also found that behaviour change is more likely when challenges and solutions are framed positively. 
  • To facilitate action, we need to focus on issues that affect a community personally and provide an enabling environment for them to identify local solutions, focusing on the positive impact the solution will bring about.
• Target audience: Policymakers need a deep understanding of the target population’s behavior, motivations, and the barriers that prevent them from making better choices.
  • Conducting behavioral research and identifying cognitive biases that people might have—like the status quo bias, loss aversion—is crucial.
• Social and Cultural Context: Nudges must be tailored to the specific social and cultural context of the audience. What works in one society or community may not work in another.
• Appropriate Defaults: One of the key principles of choice architecture is setting appropriate defaults. With limited time and an increasing number of alternatives, individuals are likely to pick the default option given to them, and defaults can be used to promote better choices.
  • Simplifying options and reducing unnecessary complexity can nudge people toward better choices.
• Social marketing: Social marketing encompasses the design, implementation, and monitoring of programmes created to influence the acceptability of social ideas. 
  • Nudges that leverage social norms, such as displaying information about how neighbors are conserving energy or recycling more, can motivate individuals to align with the group norm.
• Infrastructure: The back-end facilitation of infrastructure is essential to allow for easy adoption of the behaviour, be it cycling tracks or easy availability of millets in neighbourhood stores.
• Remove Barriers: People are more likely to adopt desired behaviours when the friction or effort involved is minimal. Making the desired option easier, quicker, or more convenient can significantly increase uptake.
• Feedback Mechanism: Giving people feedback about their actions can reinforce positive behaviour. For instance, smart meters that show real-time energy consumption help users adjust their usage instantly.

5.1. How to nudge ethically?

• Nudge for Good: Nudges should always be in the best interest of the individuals and communities being nudged.
  • Ethical Nudging focuses on guiding people toward behaviors that improve their health, well-being, and social welfare.
• Freedom of Choice: Nudges should never eliminate or restrict freedom of choice. 
  • It should create an environment where people feel empowered to make their own decisions without undue pressure or fear of negative consequences.
• Transparency: Nudges should be transparent, meaning individuals should be aware that they are being nudged.
  • Covert manipulation or hidden nudges, where people are unaware they are being influenced, violate ethical standards.
• Human Dignity: Nudges should ensure human dignity in their design and should not exploit human vulnerabilities or cognitive biases unfairly.
• Value-Driven Nudging: Nudges should align with widely accepted moral or ethical standards and consider cultural, social and moral values of society.
• Proportionality: Ethical nudges should be minimally intrusive, meaning that the level of influence exerted on an individual's choices should be proportionate to the policy goal.
• Accountability: Ethical nudges should be subject to public scrutiny, debate, and revision. Policymakers should be accountable for the design and implementation of nudges.

• Boost: Boosts aim to help people by expanding (boosting) their abilities to make decisions that are aligned with their goals. 
  • Additionally, boosts don't just target people's choice environment but also their heuristic repertoire (skillset).
  • Boosts provide individuals with tools, knowledge, or skills to help them achieve their goals more effectively. 
    • For example, teaching financial literacy skills to help people manage their budgets or improve decision-making regarding long-term savings.
• Nudge+: Nudge+ combines the subtle guidance of a traditional nudge with additional feedback and engagement from the individual. 
  • It addresses concerns about manipulation by actively involving people in the decision-making process, making them aware of the nudge.
  • With Nudge+, individuals are informed that they are being nudged and are invited to reflect on whether they want to accept or reject the nudge, promoting transparency and autonomy.
• Shoves: A shove is used to describe explicit regulation of individual behaviours in situations where the benefits to the individuals are perceived to outweigh the costs - e.g. a ban on smoking.
  • In other words, shoves are regulatory or coercive measures that involve the imposition of mandatory rules, prohibitions, or incentives to alter behaviour.
  • Unlike nudges, which preserve freedom of choice, shoves compel behaviour through laws or regulations.
  • For instance, imposing a ban on smoking in public places or taxing sugary drinks to reduce consumption are examples of shoves.
• Budges: A budge is when insights from behavioural science are used by policy makers to decide where and how to regulate against undesirable private sector actions.
  • The key distinction with the nudges is that budges focus on creating rules to restrict harmful or manipulative practices by organizations rather than individuals.
  • Example: Regulations requiring banks to display clear and transparent information about fees or requiring food companies to display accurate calorie counts are examples of budges.
• Think: This approach advocates for engaging the public in a more deliberative, participatory process.
  • Unlike nudging or shoving, which focus on guiding behavior, Think emphasizes democratic deliberation and education to foster informed decision-making and collective responsibility.
  • Public consultations on urban planning or climate change strategies are examples of the Think approach.
• Sludge: Sludge refers to unnecessary or excessive frictions, barriers, or delays in decision-making processes that hinder people from making the right choices.
  • Unlike nudging, which simplifies choices, sludge makes it harder for people to do something.

Given the state of our planet and the rate and magnitude of changes required, nudges, by themselves, are woefully inadequate, but combined with measures like incentives and mandate based policies, they can be effective behaviour modifiers in some cases. Considering this, the architecture of the nudge should understand target audiences, social contexts, market forces, friction factors and nudge timing well to achieve desired results. 

When local communities focus on specific problems and are involved in devising and implementing the solutions, there is greater ownership and hence, a sustained commitment. The work of small groups can also have a ripple effect because we evaluate ourselves by looking at others around us.