Economic Survey 2019: Invoking Behavioural Economics The Indian Way
People stretch performing a yoga pose at Lodhi Gardens in New Delhi, India. (Photographer: Udit Kulshrestha/Bloomberg)

Economic Survey 2019: Invoking Behavioural Economics The Indian Way

Economic surveys are about debates around the future of the economy, data, dot plots and bar graphs. The Economic Survey 2018-19, however, takes a detour into behavioural economics.

Not just of the garden variety but ‘Behavioural Economics — The Indian Way’.

In a chapter titled ‘Policy For Homo Sapiens, Not Homo Economicus’, Chief Economic Adviser Krishnamurthy Subramanian invokes Indian mythology in the hope that behavioural change can fix age-old economic problems ranging from tax compliance to women’s empowerment.

Insights from behavioural economics can be strategically utilised to create an aspirational agenda for social change, Subramanian writes.

Women Empowerment: Invoking Lakshmi

The first area where Subramanian suggests the country use its mythological moorings is in the area of women empowerment. Indian women have enjoyed a position of respect and reverence in ancient Indian society, Subramanian writes.

He goes on to cite a list of examples.

“Ardhanareshwar — a half male-half female representation of Lord Shiva — captures the equality between men and women. The Rigveda identified many women sages as treasures of knowledge and foresight: the prophetess Gargi, who questioned the origin of all existence in her Vedic hymns and the great Maitreyi, who rejected half of her husband’s wealth in favour of spiritual knowledge. The long philosophical conversations between sage Agasthya and his highly educated wife Lopamudra are legendary. Men in ancient Indian society were identified with their mothers, Yashoda-Nandan, Kaushalya-Nandan, Gandhari-Putra, as well as their wives/consorts, Janaki-Raman, Radha-Krishna.”

All these instances, Subramanian suggests, should be used to fashion a ‘BADLAV or ‘Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi’ programme.

Tax evasion, Wilful default & Pious Obligation

If the tradition of Lakshmi has been invoked to end centuries of women oppression, then the ‘Doctrine Of Pious Obligations’ is being cited as a way to end, once again, decades of tax evasion and default.

The Economic Survey cites Hindu scriptures, Islam and Christianity to say that unpaid debt is bad karma.

“In Hinduism, non-payment of debts is a sin and also a crime. The scriptures ordain that if a person’s debts are not paid and he dies in a state of indebtedness, his soul may have to face evil consequences...
Under Islam, Prophet Muhammad advocated — “Allaahummainnia’oodhibika min al-ma’thamwa’lmaghram (O Allaah, I seek refuge with you from sin and heavy debt).” A person cannot enter Paradise until his debt was paid off...
The Bible says, “Let no debt remain outstanding except the continuing debt to love one another – Romans 13:8”, and “The wicked borrows and does not repay, but the righteous shows mercy and gives – Psalm 37:21.”

The repayment of debt in one’s own life is prescribed as necessary by scriptures across religions.

“Given the importance of religion in the Indian culture, the principles of behavioural economics need to be combined with this “spiritual/religious norm” to reduce tax evasion and wilful default in the country.”

From Swachh Bharat To Sunder Bharat

The survey also suggests that an increased focus on health can be brought about by using the priniciples of “inner beauty”.

“Taking our learning from the power of behavioural economics in the Swachh Bharat scheme, the way forward is to develop an all-encompassing behavioural economics architecture for the entire health sector as health signifies inner beauty.”

The survey explains that people often make healthcare choices that are not best for them. A nudge in the right direction can improve choices.

Some suggestions to provide that nudge: School menus can be redesigned to make healthier choices sound more attractive, campaigns focusing on the number of people who don’t drink or take drugs, asking patients to sign a pledge in front of an ‘accountability partner’ to adopt a healthier lifestyle, and appreciation certificates for those that stick to their goals.

“A potentially richer set of behavioural tools than provided by traditional economic theory is necessary to understand and influence health care behaviour,” the survey says.

Coming Soon: Department Of Behavioural Change

While citing these and other examples, the Economic Survey recommends that a behavioural economics unit in the NITI Aayog be immediately activated.

Every programme must go through a “behavioural economics” audit before its implementation, the survey says.

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