Motivating knights and knaves among policy-makers

A few years ago, there were murmurs that the NITI Aayog will be setting up a ‘Nudge Unit’ which would subtly guide people towards the ‘desired’ behaviour. This was around the time when noted American economist Richard Thaler was awarded Nobel prize for his seminal work on behavioural economics.

Although the then Minister of State for Planning Rao Inderjit Singh asserted that NITI Aayog has not established any such unit., in his reply to the first author’s question in the Lok Sabha in February 2019, this year’s Economic Survey staunchly supports the idea of establishment of a behavioural economics unit at the NITI Aayog. Consequently, NITI Aayog is seeking to recruit behavioural economists to reform policy-making.

The chapter titled ‘Policy for Homo Sapiens, Not Homo Economicus: Leveraging the Behavioural Economics of “Nudge”’ brings to the fore the importance of behavioural economics in the diverse and complex arena of public policy. The chapter emphasises employing the principles of behavioural economics by ‘nudging’ the beneficiaries (users) of social policies and government programmes towards a desirable pattern of behaviour.

There is no denying the fact that if used correctly and ethically, such interventions are effective tools in the kitty of policy-makers for achieving desired policy outcomes.

But at the same time, behavioural interventions should also involve influencing the public service professionals who implement the policy at the grassroots (the real service providers). To do so, it is essential to understand the multifaceted motivational urges which drive the behaviour of public servants.

Subsequently, the incentive structures of public doctors, nurses, teachers, civil servants etc, should be designed keeping in mind their motivations. While creating the policies, this is the other side of the coin, which is either ignored or misjudged.

The principal concern of a knave is to further his or her interests. They are the so-called homo-economicus or the economic man who always aims to maximise their own utility. Therefore, in order to influence the behaviour of the knaves, a definite hierarchy in public services along with external rewards and penalties in the event of non-compliance can be beneficial.

The incentive structures for public servants in our country primarily revolve around this principle. Pay for performance incentive models can also be introduced for public service professionals.

On the other hand, there is no dearth of knights in our public services apparatus who go beyond their call of duty for making the lives of citizens better. Inayat Khan, an IAS officer from Bihar, adopted daughters of two Pulwama martyrs and along with the district officials, has promised to bear all the educational expenses for these girls.

Pari Baldevpari Javerpari, a teacher in a government school in Gujarat, has developed several mobile apps that help students engage actively and effectively with curricular experiences in mathematics free of cost.

The inference is that the knights are individuals who are motivated to help others without expecting any rewards. In pursuing their selfless motives, they may even undertake activities that are detrimental to their interests.

Therefore, the policies designed with the assumption that people are knaves might suppress the natural altruistic impulses. This, in turn, affects their motivation for contributing effectively towards public service delivery. Hence, solely relying on monetary incentives might not be a useful tool while dealing with the knights.

To remedy this, equipping the knights with autonomy could be helpful as it may serve to strengthen their resolve for public service. The ‘street-level bureaucrats’ require some amount of independence for addressing the problems faced by people at grassroots, which are sometimes not visualised at the stage of policy formulation.

However, it is easier said than done. First, it is difficult to ascertain who is a knight and who is a knave. There isn’t necessarily a shortage of knights. There are jobs around us that reinforce this point of view — for example, the forces.

Binaries exist within the same subset – say there are doctors who work for Medicines Sans Frontiers and for that matter in our public hospitals like AIIMS, while there are also the doctors who are ‘homo-economicus’ and try to maximise their own utility.

Without casting any aspersions on the morality of the latter, we argue it is crucial to identify the knightly and knavish tendencies in people. Identification of knights requires extensive psychometric tests and correct identification of drives and motivations via the same. Although it will not be 100% accurate, it will give us an insight into the motivations of the public servants.

Autonomy and discretion

Second, providing autonomy and discretion without proper accountability framework in place can lead to corruption, especially in the case of a society which primarily consists of knaves. Therefore, an appropriate framework of accountability is necessary.

Third, the empirical evidence suggests that people in public service are not purely knights or knaves; instead, they are a mixture of both. Therefore, to tackle the entire spectrum of stakeholders in public policy, we need to develop interventions and an incentive structure which can cater to both the knavish and the knightly motivations of the officials.

While designing policies, the conflict between self-interest and altruism has to be satisfactorily resolved. We are not arguing that knaves should be converted to knights or vice versa, rather we suggest that knavish and knightly incentive structure should be aligned. Awards for public service are another means (to be distinguished from rewards).

India is set to be the world’s most populous country by the middle of the next decade, and the stakes in the arena of public policy for growth are high. Behavioural economics can prove to be a gamechanger where orthodox approaches seem to have failed.

As the decades pass, behavioural changes will be the difference between success and failure in tackling issues such as climate change and population control. It remains to be seen whether the prescriptions of this year’s Economic Survey are given the due attention they deserve. A radical rethink is long-pending.

(Singh is a Member of Parliament; Aditya is a student at London School of Economics and a policy analyst)