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Asian Opinions

Chia Yan Min
Tuesday, Aug 5, 2014

Asian Opinions

Pushing for the art of nudging the people

The Straits Times | Chia Yan Min | Tuesday, Aug 5, 2014

The former regulatory chief of the Obama administration, Professor Cass Sunstein is widely considered to be a pioneer in the use of behavioural economics to shape public policies. In that job, one of his roles was to simplify government programmes and messages, and make them more accessible to citizens.

H is work has helped launch a behavioural economics revolution now reshaping policymaking worldwide.

Yet law professor Cass Sunstein's message to governments is a simple one: Approach policymaking with humility and modesty.

The former regulatory czar of the Obama administration and an influential Harvard don, Prof Sunstein, 59, was in town last week to speak to civil servants at a symposium at the Civil Service College.

The professor is widely considered to be among those who pioneered the application of insights from behavioural economics and psychology to public policy.

Try as they might, governments often do not have all the information they need to design the best possible policies, said Prof Sunstein.

Quoting from a 1944 speech of the aptly named Mr Learned Hand, known as one of America's most influential and respected judges, he said: "The spirit of liberty is the spirit that is not too sure it is right."

The judge's remarks had urged Americans to avoid dogmatism and remain open-minded - a quality modern-day policymakers should aim to embody.

That message seems all the more important today in Singapore, where a more vocal population and seemingly ever more complex policies are creating confusion and sometimes unhappiness over policies such as the Central Provident Fund scheme.

While declining to comment on Singapore specifically, Prof Sunstein does allow this: "I know Singapore has extraordinarily educated citizenry, and that is the best foundation for productive interactions between government and citizens.

"If people are involved in constructing policies, then these policies have a legitimacy that is greater than if the government were dictating them."

Soft-spoken and genial, the professor seems far removed from Washington's stereotypically hard-nosed lawmakers. His fatherly air is in keeping with the approach to policymaking that he advocates: nudging instead of shoving.

Rather than laying down mandates or implementing bans which threaten people into not doing something, the idea of nudging is based on research that shows it is possible to steer people towards better decisions through the use of policy mechanisms.

Examples of these include automatic enrolment in retirement savings schemes and equipping people with methods to measure their energy consumption.

This is because - contrary to the assumption of textbook economics - human beings do not always make rational decisions. If they did, people would not make bad choices, such as smoking, not saving for retirement or not exercising, so the argument goes.

The use of behavioural economics to better inform policymaking has been growing in popularity in Singapore's public service, with several government bodies already piloting such methods.

With policies becoming increasingly sophisticated, governments the world over are facing the challenge of keeping them both effective and easy to understand.

Behavioural economics offers some insights into doing this well, said Prof Sunstein.

Governments should not only actively invite public comment on their policies, but also build in mechanisms to correct their own mistakes. One way to do this is to have "regulatory look-back" mechanisms - a commitment to evaluate policies at regular intervals.

For instance, the government can "nudge" itself by allowing a policy to automatically lapse after a certain number of years if no action is taken to reinstate it.

Policymakers - whom he calls "choice architects" because they build up the structures around which citizens make decisions about their lives - can themselves benefit from good choice architecture, said Prof Sunstein.

He also emphasised the importance of basing policies on real-world evidence.

"(Empirical research) doesn't always get people marching, but it can be indispensable to helping governments do better."

However, Prof Sunstein noted that critical to the behavioural approach to policymaking is citizens' trust in the government, as nudges will go down well only if people believe in its good intentions.

This entails not just embracing a spirit of openness during the process, but also not hiding the fact that nudges are being used.

"I do think that it is very important for public officials to respect citizens, and so you shouldn't hide nudges - you should be completely open and transparent about them," said Prof Sunstein, adding that empirical evidence shows nudges can be effective even when people know they are being nudged.

"If people don't want to do something simply because the government is suggesting it, then the government should probably work harder to gain people's trust."

Trust can be bolstered by a better understanding of policies and governments can help make policies more accessible by taking a simpler, more targeted approach.

"Human beings have limited bandwidth... they have limited capacity to pay attention to things. Simplification is a way of reducing the bandwidth tax," said Prof Sunstein.

He cited, as an example, a United States government programme that entitles children from lowerincome households to free meals at school.

To increase the take-up rate, the programme was tweaked to include eligible families by default.

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