Divanshu Sethi

In one of the most significant behavioural changes in modern times, the COVID-19 experience brought several challenges to the field of behavioural economics. From the uneasy debate of behavioural fatigue to creating successful norms for restricting the spread of the virus. However, practitioners have a long way to go vis-a-vis making the field more robust in its understanding and in its attempts to contribute effectively to policy making.

Over the years, behavioural economists have caught many governments’ attention in developing behavioural change frameworks to influence citizen behaviour. It started with the UK and USA governments in the 2010s, which established their respective nudge units to help in policy making. The Indian government has also seen some of the benefits in recent years and have started working with behavioural units in the country to deliver some of their services. One of the main reasons that this science has interested governments is the low-cost nature of nudges. 

When the COVID-19 pandemic hit, governments rushed to develop policies with some of their behavioural experts, altering citizen behaviour to restrict communicability. This was the time to test behavioural economics’ competency and see whether it can be a potent tool in policy making as argued by its supporters for many years. 

Governments worldwide adopted varied restrictions. Where the U.K. was taking a more lax response, India adopted one of the strictest lockdowns in the world. In the former, a controversy started when some experts recommended herd immunity based on almost 70% of the population getting affected by the virus. This was based on and complemented by some controversial remarks by behavioural experts, who used “behavioural fatigue” as a reason not to enforce a lockdown early as people will get fed up with it. Immediately, almost 600 behavioural economists wrote a letter questioning the evidence of the behavioural fatigue argument. In the end, the U.K. government enforced a lockdown. 

The episode of “behavioural fatigue” brought controversy to the field, which has frequently been looked at as over-generalising and over-claiming and often faced replication problems. This can be attributed to a false perception about what behavioural economics is and what it offers to public policy. 

Behavioural Economics is the study of humans, organisations, and governments’ behaviour employing disciplines of psychology and economics. It critiques the dominant position of the rational model of the economic agent. Even though the field has been around for decades, it was made popular with the application of “Nudge” — a cost-effective tool to modify human behaviour. 

During COVID-19, various countries adopted nudges in their policy decisions. One of the widely used ones was the 2m distancing signs in public spaces that visually prompts citizens to distance themselves and avoid overcrowding. Another was focusing on creating a clear message to the public on how to behave during a pandemic. As overload of information could be confusing, a salient messaging like ‘Stay Home; Protect the NHS, Save Lives’ helped the public adhere to a particular behaviour. But the most popular was singing the Happy Birthday song for the recommended 20 seconds hand wash, which gave people a reference point. The development of these nudges was by identifying the heuristics and traits of human behaviour. 

Some of these nudges were fruitful in the pandemic as many people changed their behaviour which helped restrict the spread of the virus. However, many of them failed in different environments — a point on how it is difficult to generalise nudges. Therefore, a nudge’s efficacy should be tested extensively across different contexts to make them robust. But often, we fail to focus on the testing part and accept a general theory of nudges, which leads to unintended consequences. For example, the famous nudge discussed by Richard Thaler of auto-enrolment savings program, which leads to higher savings for people, is discussed as a general way to use nudges. In many areas, it has led to that conclusion. However, when a set of US Army civilians were auto-enrolled for a similar savings plan, the research found that it left people with higher mortgage and car debt, and the long-term savings result was inconclusive. 

Nudge as a tool is one part of behavioural economics; however, it has become synonymous with it, leading to problems of misinterpretation. Many behavioural economists argue that sometimes nudges or behavioural intervention are not the best fixes for behavioural problems. This is attuned with the lockdown during the pandemic where governments had to resort to strict intervention due to difficulty in changing human behaviour through nudges. 

Nevertheless, behavioural economics is an efficient tool when assessing behavioural changes in people. For instance, with a new set of social norms and stigma during lockdown, non-compliant individuals could be behaviourally intervened by making these new norms salient. Another point is to understand the pandemic fatigue through evidence and develop behavioural solutions that are contextualised. But a big problem faced by governments is the infodemic of misinformation with the pandemic, particularly by the anti-vaccination movement which can jeopardise the effort to combat the virus. This is the next challenge for behavioural economists, to understand anti-vaxxers’ behaviour and try to modify it. Other challenges lie in making citizens comply with the vaccination drives and continue to adhere to safety guidelines. 

The experience of COVID-19 has been a testing ground for the theories of behavioural economics. Some of them have responded well when it comes to norms, slight behavioural changes, saliency, etc. However, other theories brought controversies like the untested evidence of behavioural fatigue. These limitations should be discussed more and referred to when designing behavioural interventions, particularly nudges, which might not always be the best response for behavioural problems. 

The future of behavioural economics lies in collaboration among diverse teams with local knowledge and a multidisciplinary approach to understanding behavioural problems and avoiding over-generalised theories. More importantly, there is a need for epistemic humility among behavioural economists to lead a more robust and evidence-based behavioural approach. 

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.