Using behavioral science for greater economic good

GCC states are engaged in ambitious national transformation programs that depend to a large extent on the choices of individuals. Improving national health levels, to use just one example, involves people adopting healthier eating habits and leading more active lifestyles – an area where traditional methods of policymaking such as application of fines, incentives or taxes are not always effective as stand-alone tools.

The answer may lie in the behavioral sciences. Over the past decade, the use of behavioral science in policy making has become commonplace in many governments who increasingly use this new science to achieve a common good. In fact, behavioral economist Richard Thaler won the 2017 Nobel Prize in Economics for pioneering behavior-based policies.

The field combines knowledge from economics, psychology, sociology, and neurology to understand what makes people tick. It explores beliefs, attitudes, and emotional triggers that make them less sensitive to rules, regulations, incentives, and sanctions, even when it goes against their personal best interests. He then designs interventions that push people towards the common good, without restricting their freedom of choice.

To be successful, behavioral interventions must be tailored to specific social and cultural contexts, and combined with conventional policy levers and supporting infrastructure. They involve relatively inexpensive tools that include slight variations in messaging, drawing on patterns of behavior, initiating comparisons with peers, or applying game principles (e.g. competitions, trophies) as incentives.

These behavioral interventions are not a silver bullet, but GCC governments can still use them to improve interactions with their citizens and address key national challenges related to health, environment, parenting, empowerment. women and consumer protection, to name a few.

For example, GCC policy makers could use behavioral science to promote their national health agendas. As lifestyles in the CCG become more and more sedentary, the risk of contracting diseases related to lack of exercise or poor diet increases. Strategy & estimates that GCC countries spend nearly 36 billion dollars (132.23 billion Dh) per year for the treatment of these diseases, including diabetes.

In response, GCC governments could use models to promote healthy diets or turn exercise into games or competitions. Singapore, for example, made people walk more by encouraging them to post their achievements on social media to win prizes. Such tools can prove to be powerful additions to more conventional policies like sugar taxes or welfare programs.

GCC governments could reduce overconsumption of water and electricity by instilling sustainable consumption patterns in households. This includes reducing shower time, shutting down air conditioners and other devices in empty homes. In fact, Saudi Arabia and the United Arab Emirates, the region’s biggest water users, use 10 times and 39 times the amount of renewable water, respectively. In addition, in 2017, more than 70% of GCC homes were poorly insulated and used some 25 million low-energy air conditioners.

One potential solution might be to highlight the level of subsidy in utility bills, compare bills between households, or launch national awareness campaigns to educate people about the environmental impact of overconsumption. In 2014, Egypt reduced its demand for electricity by teaching consumers to be energy efficient – turning off unused appliances or setting air conditioners to the correct temperature, to use just two examples.

These methods should be accompanied by conventional policy tools such as the introduction of smart meters, the implementation of national energy efficiency standards and the reduction of subsidies.

Likewise, behavioral information can encourage compliance with value added tax (VAT), which now applies in Saudi Arabia and the United Arab Emirates. Adjusting to the new tax could prove difficult for companies accustomed to a low or no tax environment.

GCC governments can look at the work of the Behavioral Insights Team (BIT) in the UK for a successful example. The ILO has reformulated communications to late paying taxpayers, pushing them with messages such as “The vast majority of people in your area pay their taxes on time”.

This has produced both increased on-time payments and millions of dollars in revenue. Such messages, calling for compliance with social standards, will need to be accompanied by the usual fines for tax evasion and companies that use VAT to overcharge their customers.

The integration of behavioral science into policy design is a new concept in the CCGC. Successful integration requires each government to set up a behavioral analysis unit dedicated to the implementation of interventions. These units will begin to build their capacity by leveraging established institutions and expert skills, and then partner with government organizations, universities and the private sector to scale up their interventions.

Standard policy levers will not be enough if GCC governments are to unlock truly transformative change. Instead, they’ll need to appropriately channel the power that behavioral insights can bring to familiar policy tools.

– Fadi Adra and Yahya Anouti are at Strategy & Middle East. Samer Dada and Philippa Clayre are at WPP Middle East and North Africa.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *