Professor Cass Sunstein was joined by NITI Aayog CEO Amitabh Kant and Shereen Bhan for a night of thought-provoking, insightful discussion hosted under the Aksha platform of the Bill and Melinda Gates Foundation in New Delhi on August 7, 2019. A former administrator of the White House Office of Information and Regulatory Affairs, Professor Sunstein is the Robert Walmsley University Professor at Harvard and the founder and director of the Program on Behavioral Economics and Public Policy at Harvard Law School. His seminal book, Nudge, co-authored with Richard Thaler, changed the face of behavioral economics and choice architecture. Professor Sunstein sat down for a fireside chat, discussing his pioneering concepts of Nudge and Sludge and the impact these systems can have on behavior, choice, leadership, social norms and more.
Nudge and Sludge
Professor Sunstein defined a nudge as “preserving freedom of choice but nudging [people] in directions that will make their lives go better.” When asked if he would call a nudge an incentive, Sunstein explained he saw them more like a “GPS system that tells people how to get to their preferred destination.”
Nudges can be used to enact social progress. With a few small changes to how information is presented, a nudge can shift the narrative drastically. Professor Sunstein cited the problem of free school meals in the United States as an example. “The rate of participation in this program was well under 100%," he said. However, the government shifted the idea from an opt-in design to an opt-out design and said to students “if you’re eligible for the program, you’re in the program.” While this cost no money to implement, the result was that 15 million children are now enjoying the free, healthy meals to which they are entitled.
Sludge, meanwhile, involves removing “unnecessary complexity or administrative burden.” To illustrate the power of sludge reduction, Sunstein used the example of educational opportunity in the United States. In 2010, poor children were entitled to money to help them go to university. However, many of these underprivileged young people were deterred by the 105-question form required to access these funds. The remedy to people not filling out this form? Sludge reduction.
“Simplification of these forms was shown to improve university attendance as much as a several-thousand-dollar increase in the financial aid available,” Sunstein said. It was clear to see that streamlining and removing the “sludge” of excess administration could have just as much impact as simply injecting money into the system.
Some international success stories
There are countless examples of nudge and sludge implementation leading to real behavioral change. The secret lies in providing easier access to information regarding social norms rather than offering any kind of reward or incentive.
In the UK, for example - excess prescriptions of antibiotics were reduced by 65,000 in 6 months merely by notifying those doctors who were overprescribing the medication in comparison to their counterparts. This quick change was brought about at very little cost, and without imposing any mandates, law-changes, rules or rewards.
As Sunstein stated, people tend to be sceptical about mandates or prohibitions - they don’t like being told what they can and can’t do. However, simplification of access “unifies people across political and cultural lines.” When companies like Burger King put calorie labels on their menus, for example, there is a two-fold impact. Firstly, consumers are able to make their own decisions regarding their health. Secondly, the quality of the product the companies are putting out also improves.
It’s also crucial people are aware of emerging social norms, Sunstein said. “Don’t tell people that this is the norm, but that is it the coming norm.” People don’t want to be on the wrong side of history. They want to be with the trend. They don’t want to be yesterday. “People tend to think that what other people are doing is smart, civil or civic,” and being part of emerging social norms triggers a sense of pride.
There is “citizen comfort” in a diverse range of democracies - and even people from non-democratic countries - who express enthusiasm for such policies. “The people who we are privileged to serve are pleased [by these policies] rather than angered,” Professor Sunstein said.
Even in philanthropy, nudges can change social behavior. “Telling people what their peers have done can be a powerful nudge,” Sunstein said. By making data about philanthropic donations readily available, there’s a social nudge towards more generous inputs. “This can work for very large donors or moderately large ones,” he said. A nudge can also take the form of “an anchor” - a suggested donation fee contributors can work around. “If you give a very high amount, they’ll produce a larger amount than if you give a lower anchor,” Sunstein said. Other forms of philanthropic nudges include recurring donations and ‘give more tomorrow’ plans.
Nudge and Sludge in India
“India has a greater combination of capacity and opportunity for change than any nation on the face of the earth. It’s the largest democracy on earth. It has the greatest capacity to get things done,” Sunstein said. “The best is yet to come.”
According to Amitabh Kant, nudging can be used to drive this behavioral change in India. To nudge is to use positive reinforcement to influence behavior and decision making, rather than legislation or enforcement. Access to information is critical in this respect. In 2016, for example, under the policy of demonetization, 99% of cash was sucked up out of India’s system. “There was so much cash in India it was almost impacting the economy,” Kant said, and behavioral changes had to be enacted through nudging in terms of technology and education on a unified payment system. “A huge amount of work was done in terms of working with a vast segment of the population to educate them on digital payment,” Kant said.
Professor Sunstein also cited India’s open-defecation posters as an example of a successful nudge. The 2019 poster - which warns that open defecation is the leading cause of child death - is not an incentive so much as “a recognition [...] an independent set of instruments that steer people in certain directions.”
One of the best aspects of these nudge and sludge processes is the low cost. Nudges are usually inexpensive - very large gains are offered for very little expenditure. Nudges also provide freedom of choice. People can say “I hear you and I’ll give it a go.”
How can people leaders learn from the nudge approach?
“The human mind works by narrative,” Sunstein said. So, if leaders can touch upon an event that resonates with people andechoes a story that means something to them, this can be hugely effective, more so even than data and statistics. Ingraining this story in people’s minds - especially if the person can be said to stand for something - is an extremely effective way to make people’s behavior more generous or courageous. Sunstein cited Gandhi as an example of this - both on a global scale and in India.
On another level, information on leaders should be more readily available, Amitabh Kant stated. Data should be put out there to display those leaders who are performing to standard and those who aren’t. “In a democracy, people have a right to know why certain sectors are doing well,” he said. Data in the public domain should provide insight into how and why their leaders are failing. The spirit of competition this engenders - this increased awareness of social norms - will enable change in India.
The next steps
When quizzed about the next great social transformation, Sunstein pointed to health and equality on the basis of sex. On these issues, government policy must walk hand in hand with the people around the world who believe in equality. Sunstein is sure, however, that these social movements are “very good for men and women and economic growth.”
In terms of how to get companies to hire more women and get more women on boards, legislation may not necessarily be the best way to speed up this process.
“Ideally social norms should be accelerated through self-conscious efforts to point to role models,” Sunstein stated. However, for more entrenched inequality, he said, it's legitimate to think about “stronger steps”.
Movements such as anti-vaccination and climate change denial must be “met with facts,” Sunstein argued and, as he rightly pointed out, social media demonstrates the power of people coming together collectively to articulate a need for change. He cited movements such as #MeToo as an example, stating that “practices that are not tolerable but widespread” can be talked about freely through these platforms. However, there is “much noise and misunderstanding” on social media, so as an instrument for information gathering there may be different ways. While Amitabh agreed, “there is too much noise on Twitter,” he accepted social media is a “powerful tool for nudging people. It has a lot of positives.”
With regards to gender equality, Amitabh echoed Sunstein, stating that “you need to change behaviors, you need to change the mindset. All this is a function of nudging. No legal changes will bring sustained revolutionary changes. It has to come from the mindset.”
Image credits:Christina Animashaun/Vox