Application of behavioural economics can enhance efficacy of public policies and programmes: Economic Survey

The application of 'behavioural economics' can enhance the efficacy of public policies and programmes in India, says the Economic Survey 2018-19, tabled in Parliament by Union Finance and Corporate Affairs Minister Nirmala Sitharaman on Thursday.

Stating that a country like India where social and religious norms influence the behaviour of people, the Survey says that this type of approach can lead to the success of public policies and programmes.

The Survey has also recommended the setting up of a 'Behavioural Economic Unit' under the government's thinktank NITI Aayog and that every programme must go through a 'behavioural economics audit' before being implemented.

"Drawing on the psychology of human behaviour, behavioural economics provides insights to 'nudge' people towards desirable behavior," says the Survey.

Citing examples of the success of popular government schemes like 'Beti Bachao Beti Padhao' (BBBP) and Swatchh Bharat Mission (SBM), the Economic Survey states that these schemes applied behavioural insights for enhancing the impact of the policy.

"The community based approach to sanitation in SBM with the help of Swachhagrahis whose similarity with Satyagrahis helped to reinforce the message. The gender empowerment component of SBM helped to become a complement the Beti Bachao, Beti Padhao scheme," says the Survey.

According to the Economic Survey, the key principles of behavioural economics include 'emphasizing the beneficial social norm', 'changing the default option' and 'repeated reinforcements.'

The economic survey further proposed that although principles of behavioural economics have been applied by several Indian programmes, there is still sufficient scope for leveraging these insights for enhancing the efficacy of these policies and programmes.