Getting public policies right

FAIZAL is having a difficult time coping with the Covid-19 pandemic. Previously a Grab ride-hailing driver, he no longer has a reliable income as there are fewer or even no trips at all whenever there is a tightening of the movement control order. He has considered doing motorcycle food delivery but as a family man, found it too competitive and not worth the physical risk. With a wife and three small children to support, he looks forward to things being as they were before as he ponders his immediate future.

There is hope on the horizon in the form of the vaccination programme. But Faizal is hesitant about getting him and his wife vaccinated due to concerns about side effects and what it will mean to his children. He wants to wait and see. Meanwhile, the government knows that it needs to vaccinate 80% of the population to achieve a statistical herd immunity nationwide.

Vaccine hesitancy is a policy obstacle. There are “anti-vaxxers” even among educated people in advanced countries. The World Health Organisation (WHO) has named vaccine hesitancy as one of the top 10 global health threats. Among the reasons why people do not want to get vaccinated are safety concerns, religious beliefs, personal philosophical views, and mistrust of authority and of science. So while Faizal wants things to improve and hopes that the government will do something to help him, he does not want to take the vaccine, at least not yet.

Nudging behaviours

It turns out that people often make bad choices that lead to self-harm. This is not due to lack of education or some form of mental deficiency, but a typical trait of being human. It is not necessarily a bad thing; it is what makes humans survive and thrive. You can say that humans are constructive and destructive at the same time.

What is interesting about this seeming “irrationality” in people is that it is predictable and happens everywhere, whether in America, Europe, Africa or Asia.

You can predict the kinds of biases people have and decisions they are likely to make anywhere and everywhere. You can predict people’s expected behaviour and nudge it accordingly.

Therefore, policymakers would need to understand behavioural insights when developing and implementing policies that affect the general public. Using these insights, policymakers can nudge behaviours towards a desired outcome that serves a common good.

Behavioural insights in economic theory

Traditional economics assumes that people are rational and make decisions based on information, logic and self-interest, that result in a common good. However, behavioural economists, among them Nobel laureates Richard Thaler, Daniel Kahneman, Abhijit Banerjee and Hebert Simon, have shown that humans have certain ways of thinking that shape their choices and the outcomes. Such research has become the foundation of new economic theory that incorporates behavioural insights.

Government policymaking based on old school economics tends to be framed around regulation and enforcement, and assumes that the right price, incentives and information will result in successful policies. But when policies do not consider human behaviour, public response may be different from what is expected.

Let’s look at some examples. Mandatory recycling by households and businesses introduced a few years back is a policy that has exhausted its options and has since been abandoned. The policy required waste to be sorted into coloured bags (blue for paper; white for plastics; green for glass, cans and other recyclables; yellow for plant waste; and black for food, organic and nonrecyclable waste).

People found this complicated. Although there was an awareness programme to educate the public, and despite the authorities issuing warning letters and imposing fines of between RM50 and RM200 (with a threat of raising it to RM1, 000), it was hard to comply with because people had to find and spend money on coloured waste bags, and spend time sorting waste. In terms of behavioural change, it was not habit-forming and didn’t fit into the pace of life. The authorities themselves found that managing and enforcing the policy had become burdensome, too.

On the other hand, retailers charging 20 sen for a plastic bag is a policy that has successfully encouraged a shift to reusable bags. The disincentive is small, but it got results.

Policymaking with people in mind

Failed policies are often blamed on people’s mindsets, which assumes that the policy is inherently good and the problem is the public’s cognitive weakness and negative attitudes.

But policy cannot be created in a vacuum without considering human behaviour and the public’s response.

What is mindset? It is people’s beliefs, biases and habits that form behaviours. Biases are shaped by people’s self-identity, community and society, of how they see themselves and the people they interact with. People tend to behave like others they identify with.

And because people have limited attention spans and willpower, they rely on heuristics to make decisions. Heuristics are guesstimates or rules-of-thumb that people use to compare and contrast things they think they know, to quickly arrive at a choice in their busy world. For example, something that happened to someone becomes an analogy in their thought process. Although heuristics can be flawed, people use them as mental shortcuts to make decisions. Think of it as fuzzy logic, which is flawed but essential to arrive at a solution.

Policymakers need to understand the interplay of human behaviours and public response, as it can affect the success or failure of government policies.

Sometimes, when things don’t work as intended, policymakers pile up additional regulation and enforcement as quick remedies. It is no good to keep tweaking the wrong policy response. Regulation and enforcement add an administrative and financial burden that may not improve the result. Monetary rewards and penalties and information campaigns can be costly but unproductive. The wrong policy tweaks can lead to policy failure.

Nudging behaviours may be a better way to get the right results. It can avoid unnecessary regulation and pouring resources into enforcement. It is cheaper than costly subsidies and incentives. It gives people the freedom to make good choices rather than hurt them with punitive action.

This is not to say that regulations, incentives and penalties are not needed. Rather, the goal is to optimise behavioural response within policy implementation.

Behavioural nudges can be as simple as the daily messages sent directly to the public through texting platforms, for example, to reassure and remind people about pandemic precautions. It works alongside laws and enforcement of SOPs by the government.

Behavioural change as collective policy action

The Covid-19 pandemic has demonstrated the importance of behavioural change. Before there was a vaccine, medical science had little to offer in terms of prevention and containment of the virus, save for physical distancing, wearing a mask and washing hands. Now that there are vaccines available, we need people to want to be vaccinated. That too is behavioural change.

Indeed, some of our biggest problems, like healthcare and lifestyle diseases, education and social mobility, climate change and environmental protection, require both government and society to come together in some collective action. For that we need to merge behavioural insights into policymaking.

Behavioural insights have many applications but are particularly suited to good policymaking. Think of behavioural insights as a way to promote positive civics and ethics through nudging. This can help overcome roadblocks in policy development.

Many countries, such as Britain, the United States, the Netherlands, Australia and Singapore, have behavioural insights as part of government policy development. In Malaysia, the Economic Planning Unit is encouraging the use of behavioural insights for smarter government policies.

To this end, the Malaysia Productivity Corporation (MPC) is working with various ministries and agencies and with knowledge experts and other stakeholders to expand the application of behavioural insights in government and industry. To know more about the practical aspects of nudging behaviours, look at various literature and case studies as well as the activities of the Behavioural Insights Malaysia community group on Facebook that MPC hosts.

Eddie Razak is a consultant on social development and public policy, and was a student of Behavioural Insights while at the Harvard Kennedy School and the Lee Kuan Yew School of Public Policy. The views expressed here are solely his own.