- Nudge policies leverage insights from human psychology to influence the choice of the architecture of people.
- Nudge policies gently steer people towards desirable behaviour even while preserving their liberty to choose.
Enrich Your Learning:
The Influence Spectrum of Public Policy
- Public policy influences people to act in a socially desirable way, are it driving safely, conserving natural resources, educating children, respecting the human rights of fellow citizens or saving for retirement.
- Some policies subtly influence by fostering the right incentives while others mandate desired behaviour or ban undesirable ones.
- Public policies can, therefore, be graded on a spectrum capturing how strongly they influence (or coerce) behaviour.
- Recently, behavioural economists have discovered the efficacy of a new class of “nudge” policies that lie between laissez faire and incentives.
- Adam Smith, in his book the ‘Theory of Moral Sentiment’, noted that a wide range of human choices are driven and limited by our mental resources i.e., cognitive ability, attention and motivation.
- As individuals suffer from tremendous inertia when they have to make a choice, they tend to stick to the default option.
- The nearly costless act of changing the default on an enrolment form harvests this inertia for people’s own good.
Innovative Global Behaviour Change Interventions:
- Behavioural economics is, however, not a panacea to policymaking; its potential needs to be understood and put in perspective.
- However, the majority of public policy issues are amenable to incorporating nudges. In fact, many incentive and mandate based policies may be clubbed with a nudge effect to increase their efficacy.