30/05/2023 - 30/05/2023
Nudges for Economic and Financial Policy
Akshat Seth is the Managing Director & CEO at HIL Limited and the Vice Chairman at CK Birla Healthcare. Seth holds a Bachelor’s and Master’s degree in Chemical Engineering from IIT Delhi and an MBA from IIM Calcutta. A member of the founding team, Akshat joined the CK Birla Group in 2014. Dr. Jeevant Rampal is an Associate Professor of Economics at IIMA. Dr. Rampal’s primary areas of interests lie in Behavioral and Experimental Economics, Game Theory, Mechanism Design, Gender Economics, Industrial Organization, Development Economics, and Agricultural Economics.
During the webinar, the discussion centred around the role of behavioral economics in healthcare and business. Behavioral economics comes into play in understanding consumer needs and influencing their behavior in these domains. It was highlighted that people's behavior drives the outcomes, making it relevant not only for consumers but also for internal stakeholders. The speaker expressed particular interest in the concepts of design and productivity.
The influence of social media prompts on consumer behavior was also discussed as a powerful nudge. After discussing a particular topic, the prompts received on social media can effectively drive consumer behavior. An example of successful nudging was seen in India's commendable vaccination drive, which utilized continuous advertisements and callertunes regarding vaccination to create awareness and drive people towards getting vaccinated. Surveys conducted in relation to these nudges demonstrated an increase in demand for both lockdown measures and vaccination.
A concerning issue raised in the webinar was the quick prescription of antibiotics in rural areas without considering the dosage and patients' demographic details. The question of whether evidence-based medication protocols are being followed for dosages was brought up. Considering that doctors have varying levels of education quality, standardization becomes a crucial factor to address this problem. Peer reviews based on available data were proposed as a solution, which could drive improved healthcare by influencing doctors' behavior.
The webinar also highlighted the potential problems caused by doctors relying on heuristics based on outcomes rather than actual data, especially for patients. To mitigate this issue, it was suggested that patients could consult their doctors and ask for their opinions before undergoing surgery, thus encouraging a more informed decision-making process.
Designing programs with ease and attractiveness is key to driving the desired behavior. Reward and recognition, acting as incentives, can serve as nudges that boost employee gratification. Government subsidies on food were given as an example, demonstrating how they work at two levels: providing monetary benefits and the satisfaction of receiving food. Additionally, the anticipation of popular designs by businesses was discussed, with suggestions such as using a portfolio approach, building on past successes, understanding consumer insights and demands, and considering global trends.
In the context of green technology in construction, a concern was raised regarding how to derive value from consumers. The speaker shared that green technology is not always expensive, providing the example of cost-effective bricks as alternatives to red bricks. Government subsidies were mentioned as a helpful factor, and involving the government in such projects can contribute to their success.
Several classic examples of nudges were shared during the webinar. One example involved the Bombay suburban railway, where an alarming number of fatalities occurred at the Wadala crossing. Behavioral studies revealed that people had lost their fear, so a nudge was implemented by displaying fearful faces, prompting people to be more cautious while crossing the road. This led to a significant reduction in fatalities. Another example was seen at the IIMA mess, where food waste was increasing. By weighing and displaying the food waste, individuals became more conscious of their wasteful habits, resulting in a reduction of food waste.
In conclusion, the webinar emphasized the power of nudges in influencing behavior, highlighting their applicability across sectors and organizations.