India has had half of its 26 lakh total cases in July alone, making it clear that economic motives could not be sacrificed at the altar of epidemiological ones; these must be balanced to ensure a safe passage for the country. This often includes tradeoffs that are neither economically ‘rational’ nor epidemiologically ‘safe’. Insights from individual behavior can explain some of the cognitive challenges that policymakers face today.
Behavioural sciences study the effect of cognitive biases on individual behavior and decision-making. For example, individuals may choose to not wash their hands for a multitude of reasons from ‘present bias’ to ‘attenuation bias’. Behavioural economics expands on this, applying these biases to individuals operating in an economy; the price one is willing to pay to wash hands (time less than 20 seconds) is much lower than the accepted price (20 seconds), even though economics would argue that full availability of information about hand-washing is enough to lead to ‘rational behaviour’.
The Challenges Of Cognitive Bias
Biases filter important information where there is too much or too little available. For instance, in populated cities like Delhi, a distance measure of 1m is geographically challenging, but due to our information filtration system, it is also challenging to visualise. Many would have noticed the white circles outside pharmacies and markets during the initial stages of lockdown; these cognitive reminders help us to keep our distance.
However as the monsoon and dusty summer have but washed away these reminders, people have once again resorted to crowding around each other which could be an example of ‘status quo bias’ as noted by the British Medical Journal.
Further, concepts like ‘attenuation biases’ also helps us justify our deviant behaviour (for instance, breaking lockdown norms) by underplaying or denying its potential harm. Similarly, ‘fallacy bias’ makes us notice others breaking rules more than we see it in ourselves. Information overload and the lack of experience in new policies leads to a reluctance to uptake even though they may very well be taken up by any ‘optimising’ individual.
Another example of normalcy bias is where there is a delay or minimisation of threat warnings. For example, the strictness of the first lockdown in India was perceived as excessive, given the low case numbers in the country from March to May. In the COVID-19 pandemic, the US is a prime example of the ‘normalcy bias’ that plagued the country due to cognitive rejection regarding the severity of the virus.
It is important to note that these normalcy biases can also be induced by public policy decisions, for better or worse.
Similarly our ‘omission bias’ may have also led to us blocking out repeated reminders to wash our hands or wear masks through the media as they have become a normal part of our news and media cycle and no longer hold the peculiarity that they did before.
Individual decisions on what they consider ‘important’ is also shaped by cognitive biases, as explained above. However this can be extremely problematic in a scenario where information may already be opaque or misunderstood, leading to quick but flawed decisions, reinforcement of errors or the lack of understanding of long term goals. Examples of these include the multitude of socio-religious events that continued to happen well into the lockdown. Individuals, in conducting a cost benefit analysis, add more weight to a positive payoff in the present as opposed to a ‘rational’ one in the future. This cognitive bias regards myopia of actors, explained via hyperbolic discounting.
The Way Forward
Becker explains non-compliance as simply the trade-off between costs and benefits; if the likelihood of being called out on dishonest behaviour is low, then rationally it requires less effort to not comply.
Behavioural economics argues instead that human beings do have constraints on dishonesty due to the ‘moral costs’ of non-compliance which would impose on their conscience, albeit being societally and normatively imposed.
Moralising the importance of hygiene etiquette increases the psychological cost of abetting this behaviour, leading to more compliance. This includes clear and periodic definition of rules and closing the empathy gap between groups of people. Furthermore, harnessing our ‘availability heuristics’ can normalise the norms of distancing and hygiene to guide us through the following months, as used in Australia and the United Kingdom.
Using February 2020 as an anchor of ‘business as usual’ ensures that policymaking does not fully account the permanent weight of change that the pandemic has forced into our lives in our decision-making. Between 1918-2020, there have been nearly 100 epidemics , nearly 60 of which have happened in the last 20 years. This implies our globalised societies need to be more foolproof to epidemiological surprises, rather than just labelling them as random shocks in our economic models.
Why Is It Challenging To Translate Cognitive Biases Into Meaningful Policy-Making?
Through the change of anchors can we prepare ourselves for an uncertain future with more dynamism? The effect of harnessing our anchoring bias will also have a massive effect on the psyche of the average economic actor who will be able to behave cautiously in their daily dealings as well as foolproof their finances. It is, however, a very delicate balancing act to weigh out how much ‘good news’ and ‘bad news’ can be imparted onto a population.
The conventions of social distancing and quarantine severely lack perception surveys (even more so in India); hence it is challenging to translate cognitive biases into meaningful policymaking.
While surveys and experiments in behavioural economics are new developments, it is precisely the asymmetric nature of information that requires an analysis of how Indians cognise within those limitations. NITI Aayog, in launching a ‘Behaviour change campaign’ has taken a step in the right direction. Furthermore, using ‘nudges’ are not without its concerns; the evaluation frameworks as well as legal and ethical dilemmas need to be well thought out through experimental evidence for effective policy transmission. A deeper unlearning of blind trust in rationality that is assumed in economic actors and understanding the cognitive (and not necessarily budgetary) constraints they face is required. In the fight for lives vs livelihood, it might be worth asking how the mind of that life itself considers that choice.
(Amaani Bashir is a research fellow at the National Institute of Public Finance and Policy (NIPFP), New Delhi. The author would like to thank Anmol Rathore and Amrita Pillai (Research Fellows, NIPFP) for their valuable inputs. This is an opinion piece and the views expressed above are the authors’ own. The Quint neither endorses nor is responsible for them.
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