Posted by Varun Rajda » Add Comment »
“Don’t use unparliamentary language”, a surprisingly common response to unwarranted rudeness used in parts of northern India, has long passed into oxymoronic folklore.
A Google video search on ‘Indian Parliament’ gives us the following top results: three funny speeches, one tearful speech, one fight, and one funny fight. Recent incidents in various Indian legislatures that captured the attention of traditional and social media have included such gems as: ruckus over members not taking their oaths in the regional language in a state assembly, legislators from two different states caught viewing explicit content on their cellphones, and displays of varying degrees of lawlessness by lawmakers from the Gangetic belt. During less exciting times, legislators have been in the news for succumbing to the strain of melatonin.
The desperate focus of news channels on trivial happenings in legislatures stems partly from the tedious and dreary nature of their proceedings. Parliamentary dynamics do not engender dramatic oration: they present few opportunities for an uninterrupted monologue, and there isn’t the luxury of having the audience lend one their ears. Speaking in parliament is instead a zero-sum game where the powers of the bully pulpit are leveraged not only by the speaker of a motion, but also by its responders, debaters as well as a set of accompanying actors- from thespian to ‘C’ grade.
More importantly, speaking in parliament represents a game of signalling, where assembly members constantly undermine their legislative roles (developing and modifying laws, checking the power of the executive), in favour of their roles as representatives of their voters and party. Many aspects of their behaviour may be explained as displays of loyalty to the party line and homages to senior leaders, or as exhibitions of self-sacrifice and commitment towards members of their constituencies. What we prescribe as good legislative behaviour- civility and decorum in the house- should ideally be heightened by the presence of live television cameras. In reality, these virtues are discarded and invalidated at the cost of signalling loyalty and commitment- aspects of electoral politics and statecraft whose importance is typically underestimated by outsiders. A few aggressive acts by legislators desperate to prove a point is all it takes to socialise such behaviour. Over time, competitive signalling among members across backgrounds and party lines will ensure that it becomes the norm.
The efficacy of both ‘games’ as well as legislators’ awareness about their potential for self-advancement, is multiplied several times over by the televisation and subsequent news coverage of parliamentary proceedings. Politicians have well identified the sensational and trivial aspects of legislative footage that news coverage is biased towards, and thus act in a manner that is bound to fetch them the tastiest slice of primetime. As Krishan Kant, former Vice-President and chairman of the Rajya Sabha had said, “Today, parliament and legislatures create a new breed of heroes- the well-rushing heroes, who hope to be elevated to instant national fame, straight from the well of the house.”
Such behaviour is not restricted to Indian legislatures. The same set-pieces of eyeball-grabbing tactics are employed by members of lawmaking bodies across the world- the most popular being the repeated and organised storming the well of the house, which is typically an area with the highest camera density. Another strategy is described by journalists as ‘doughnuting’: it entails surrounding the speaking legislator in order to create an impression of numerical strength around the argument being made. Interrupting and heckling front-benchers and senior members from opposing camps- resulting in momentary but precious camera time- is a behaviour often seen in parliamentary systems. In younger legislatures, turning stationery and uprooted furniture into dangerous projectiles is not uncommon.
What explains this universally exaggerated practice of signalling by politicians? Experimental psychology may have an answer: the concept of ‘reactivity’ defines the notion that individuals modify or improve an aspect of their behaviour in response to an awareness that they are being observed. In applied research, reactivity among test group subjects who modify their behaviour in aspects that are being tested by experimenters is known by a more well-known term- the Hawthorne Effect.
Several studies have demonstrated these phenomena, even in instances where the ‘observer’ isn’t human. Littering in a Newcastle University cafeteria was found to be lower on days when experimenters plastered wall-posters of staring human eyes, as opposed to days on which walls were adorned with pictures of flowers. In another experiment at MIT, participants were made to play a public goods game on a computer, with the test group being ‘observed’ by a robot with conspicuous eyes and a foreboding name- Kismet. The results showed that subjects that had Kismet on their screens displayed higher degrees of involuntary eye-detection movements to examine their levels of privacy, and were 29% more likely to contribute towards the public good, i.e. choose the less selfish option during the game.
These effects of reactivity, combined with mismatched notions of what constitutes ideal behaviour for a legislator, result in the Hawthorne Effect working in a perversely backwards way in many lawmaking assemblies in India and abroad.
The adverse costs of such behaviour among lawmakers have been conspicuous in the last two decades in India. There has been a dramatic growth in the mediums of parliament televisation, with the initial advent of cable television, followed by private news channels, and then 24×7 news coverage. As the stakes of being seen on TV have been raised by a larger supply of belligerent, sensationalised news, as well as the insatiable demand of the Indian viewer for daily political drama, lawmakers have gone to greater lengths to fulfil the requirements of the market.
Disruptions of parliamentary proceedings and by consequence its adjournments are the cornerstone of political signalling. It is not surprising that the amount of time lost to disruptions and adjournments in the lower house has seen an increase analogous to the growth of news media outlets- from 5% of total allotted time in the late nineties to 20% and 40% in the first and second UPA terms respectively (see graph). In the fifth session of the present Lok Sabha (July to September 2015), 72% of parliament time was wasted due to disruptions and adjournments.
Many readers will find these examples as further evidence to point out the redundancy and nuisance value of the Indian parliament. This argument does not support that claim. The parliament has in recent years put aside partisan differences to pass landmark legislation on education, transparency, nutrition and empowerment.
Moreover, dedicated legislators are making up for the signalling disruptors with dedicated work. According to official data, a large part of ‘wasted’ time in the fifteenth Lok Sabha was made up for by some members staying after working hours for a total of 276 hours (or 20% of total allotted time). Not withstanding the policy paralysis in 2011-13 following the anti-corruption movements that swept the country, the number of acts passed by six successive Lok Sabhas has remained in the same neighbourhood (see graph)- in stark contrast to the sharp rise in time lost to disruptions.
Substantive ground is being covered in parliament despite televisation-driven sensationalism, not because of it. Many journalists have raised doubts that the technical glitch that prevented televisation of parliament during the passage of the bill to create the new state of Telangana, may have been deliberately planned. While such clandestine actions by governments should be questioned, few can deny that the passage of the bill was largely peaceful and prevented further conflagration in Andhra Pradesh. The only downside was that the editorial staff in HQs had to be relayed the information on events by their field reporters, instead of a live feed.
On the other hand, the conspicuousness of unruly behaviour and disruptions makes them the face of parliamentary ethos, and erodes the faith of citizens in one of our most important institutions. It is hence time to trade in Big Brother for Dr. Ferber to ensure good legislative behaviour.
PS: An alternative- greater coverage of committees, discussions
The original purpose of televising parliament was to bring large-scale democratic education to the electorate. While stopping parliamentary broadcast may rob them of procedural insights, education on the larger democratic and legislative process may be ensured by focussing cameras or transcript recorders on the committees which oversee to-be laws in their important, formative stages, as well as general discussions. The non-profit C-SPAN network in the United States has rich, diverse programming on current events, as well as coverage of important Senate hearings- such as the appearance of Wall Street CEOs to answer for their role in the financial crisis. As of 2013, their programmes were regularly watched by 47 million Americans.
Posted by Varun Rajda » Add Comment »
The ‘B’ in the title stands for Brexit- the portmanteau monicker given to the possibility of Britain’s departure from the European Union. This June, many British citizens will face their second referendum on secession in three years. Their bone of contention is the burdensome legislation from the European Council- seen by many Brits as an infringement of their gleefully miserable approach towards language, food and life in general. Since the seeds of European integration were sown, the island nation has experienced bouts of collective outrage- on Brussels deciding how bendy British bananas should be, or how sausages should be renamed as emulsified high-fat offal tubes. Some of these stories have turned out to be practical jokes planted by journalists or even pure satire- the sausage story was in fact an episode of Yes Minister. But the resulting outrage in every case has been real and present. It is with this long-term cynicism of continental appropriation, as well as coercion from extreme right-wing groups such as the UK Independence Party, that Prime Minister David Cameron decided to announce the referendum last month.
Pertinent to the referendum discussion is the syntax and construction of the question that will be posed before voters. Some may consider this a minor detail, but the Electoral Commission of the UK has conducted eleven detailed assessments on it since 2001 alone. Learnings from behavioural science justify the earnestness shown by the election watchdog, and evidence from the following historical referendums further corroborates this claim:
The framing of the question for the 2014 referendum- where Scottish citizens decided whether or not to remain a part of the United Kingdom- became a contentious issue. The Scottish National Party, who were in support of their independence, had originally proposed this question:
Do you agree that Scotland should be an independent country?
The Electoral commission pointed out the leading nature of the question. Behavioural science calls this technique of influencing responses as ‘framing’: the manner in which the question was constructed would encourage neutral voters to vote ‘yes’ rather than ‘no’. This also follows from the claim that people are more likely not to disagree with a notion that is presented in a somewhat coercive manner.
Earlier during the movement, those in support of the ‘let’s stick together’ campaign preferred this question instead:
Should Scotland leave the United Kingdom?
Here, the negative connotation of the word ‘leaving’ would make voters experience loss aversion- a state where the prospect of negative outcomes looms larger than that of positive outcomes. At the pivotal moment of a voter making their choice, loss aversion would likely bring to their minds, all the risks and tribulations were Scotland to exit the UK, thereby encouraging them to tick the ‘no’ box. Additionally, considering this nation-of-many-countries has been at peace for seven decades, secession exists more conspicuously in a negative frame than independence does in a positive one.
The Electoral Commission, which pointed out that the final question should be presented in clear and neutral terms, eventually had both sides agree on the following format:
Should Scotland be an independent country?
Although the majority voted against independence, the marginally positive framing of the final question may have impacted the overall numbers supporting independence- which at 45%- amounted to a far closer race than was expected.
The Greek Bailout Referendum was put before its citizens ten days after its announcement by Prime Minister Alexis Tsipras in June 2015. The poll asked Greeks if the government should accept the bailout conditions set by the European Commission and International Monetary Fund. A ‘yes’ would mean years of spartan hardship for citizens and businesses, but a ‘no’ would lead to a possible exit from the Eurozone.
On voting day, the question featured in the ballot was as convoluted as the Euro crisis itself: it included sixteen page appendices, and the ‘no’ option was placed above the ‘yes’. It may not come as a surprise that 61% of the voters rejected the IMF’s proposition, and the government received a handsome political payoff- domestically and internationally- for its snap poll.
Nazi Germany, 1938
Many would describe such industrial-strength nudging by governments as unethical and distasteful. They are likely to find the arrangement of ‘Yes’ and ‘No’ options of the 1938 German referendum (asking Germans if they wanted to reunite with Austria and ‘vote for the list of the Fuhrer Adolf Hitler’) as astonishing as the revelation that the Third Reich actually bothered themselves with such an extensive democratic exercise. The large circle isn’t merely a nudge, but also a hint.
Learning from history and from convoluted referendum forms in its own past, the Canadian parliament passed the ‘Clarity Act’ in 2000 that restricted questions on secession from being overtly complex. Since then, length of referendum questions has reduced from 36 words- in the case of Quebec- to the six words for Scotland. But constraints of brevity may bring with them nudges of their own- which leads us back to the referendum facing Britons this June. The Electoral Commission has already recommended a somewhat long-winded question. But it manages to nullify all the behavioural biases that would plague the standard ‘should the UK leave the EU’ or ‘should the UK stay with the EU’ formats:
Should the United Kingdom remain a member of the European Union, or leave the European Union?
- Remain a member of the European Union
- Leave the European Union
Whatever the results turn out to be, it will be heartening to note that sub-conscious behavioural science will not play a role in deciding Britain’s vote, and by extension the fate of the European Union. It is important for nudge units and behavioural sciences firms across the world to question the ethics behind nudges that tilt public opinion to any one side in a democratic debate- particularly where neither side has engaged in violent, illegal or commonly-accepted immoral behaviour. Renaming Chicken Tikka as ‘high-flavour skewered British roast’ would, obviously, be an example of all three.
Images Sources: Merkel-Cameron: Business Insider/Greek Bailout: Wikimedia/Germany Ballot: BBC
Articles Cited: http://www.bbc.com/news/world-europe-33311422, http://www.bbc.com/news/uk-scotland-20512743
Posted by Shekhar Menon » Add Comment »
Consider this quirky data point from Uber: only 1% of trips in San Francisco gets a one-star or one-star rating according to their 2014 blog article. Even after accounting for the systemic screening of drivers and the fact that Uber drivers may not be a random sample of drivers, the 1% figure ‘feels’ too low for a population of at least 20,000. What could explain such a skew?
A few days ago, the driver (or driver-partner as Uber would like to call him) of an Uber cab I hailed belched through out the ride – disgusting, right! I had made up my mind to give him a one-star. At the end of the trip though, he did a curious thing – he rated me five-star and showed it to me, saying, “Sir, I gave you a 5”. This blog post is about the consequences of that act and how it goes a long way in explaining the skew.
Uber India drivers are master behavioral scientists, as are gold merchants and sari retailers (but that’s a subject for a different blog). The cleverness lies in their use of reciprocity to nudge an upward revision of the rating. Drivers, when ending a trip, are shown the rating screen – this happens usually when the rider is still in the car. To be a truly fair system, one would expect the driver to conceal their rating of the rider and vice-versa. Surprisingly, Indian Uber drivers rate the riders five-star and cheerfully show it to the rider. This simple act kicks in reciprocity in the rider. Suddenly, the rider is under pressure to revise the rating he had ‘decided’; northwards. From ‘this belching buffoon needs a rap on the knuckle and a one-star’ to ‘maybe I should give him a three-star, after all he gave me a 5’. Robert Cialdini, in the book ‘Influence’, says “we are obligated to the future repayment of favors, gifts, invitations, and the like” – he would be proud!
How would we design a system that doesn’t lend itself to being gamed? For a start, Uber could add a forced delay between the end of a trip and the feedback step. A one minute interval could be enough to retain the memory of the last trip (to ensure accurate feedback), while forcing distance between the rider the driver. It’s not a fool-proof system – drivers could still orally indicate the fact that they would be giving a five-star rating. But I wager that the ratings would be far more evenly spread than the 1% one-star skew Uber has presently – one that is representative of the ride!
Image Credit: http://findingthefreedom.com/using-uber-abroad/
Posted by Varun Rajda » Add Comment »
It would be fair to call corruption the single most important determinant of political fortunes in recent India. The party that rode to power by defining corruption a matter of absolute morality has now begun to appreciate it as a nuanced economic problem. The decision of the Delhi government to increase the salaries of their state legislators by 400% in order to ensure their unwavering scrupulousness, has been under intense scrutiny. It begs the question: do increases in public functionaries’ salaries truly inhibit corruption?
A new study under the LSE’s International Growth Centre, mentioned in The Economist, attempts to prove that it does not. Two American economists examined the effects of such a change in compensation in Ghana, where under a new directive salaries of the police force were doubled. They studied the frequency of bribes offered by lorry drivers- a common source of illegal income for the police- over long-distance journeys to neighbouring countries. The results of econometric analysis showed that after the new law, the level of corruption among the highway police increased by several measures: more roadblocks were erected, more lorry drivers were stopped with increased frequency, and more money was extracted.
This claim goes against the conventional viewpoint supported by different economic models. A discussion on them is too nuanced to be started here, but empirical data (see graph) of economic indices (per capita income of countries against their corruption index score) shows the strong relationship between low income and corruption.
Concepts from behavioural science may explain the strong correlation. Increased pay creates a sense of fairness in the minds of employees, and they are hence more likely to be virtuous simply out of reciprocity. Moreover, with increased salaries, employees less susceptible to moral hazard are likely to enter the workforce. As this new cohort reaches critical mass, social proof dictates a change in behavior in even the most unscrupulous among the old guard.
Most importantly, the concept of loss aversion may demonstrate why incentive-led measures are more often than not an effective anti-corruption tool. Every act of corruption has a built-in risk component: the payee charges the payer for the risk of facing legal penalty or even sudden unemployment. The alternative for the payer is to follow the official but usually circuitous route. Abrupt increases in salaries cause employees to suddenly feel loss averse- they now face the chance of losing a better-paying government service.
A closer reading of the LSE study may strengthen this argument. Of all the lorry drivers stopped by policemen, 19% were allowed to pass through without paying a bribe, an increase from 10% before the increase in salary. This reduction may arise from an increased risk averse attitude, as the frequency of asking for bribes is directly proportional to the probability of legal action against the policeman. The real risk of action also increases because of more perfect information: well-informed drivers may not only bargain harder to escape paying an illegal fine, but also threaten the police with a complaint to superior officers.
This shift in risk perception is well represented by Daniel Kahneman’s risk quadrants (see image). Prospect Theory shows us that in situations with lower probabilities of gain (such as in the lower quadrant) the agent is more likely to take greater risk. By increasing the legal component of the employees’ ‘total’ incomes, the government shifts the overall probability of them reaching a certain income target into the upper quadrant, with a high probability of gains. The agent thus becomes averse to minor losses- even in weak institutions where the risks of punishment are insignificant.
Economists- as is their wont- will attempt to box corruption into a predictive model. Robert Klitgaard had famously concluded C=M+D-A (corruption equals monopoly plus discretion minus accountability). It is nevertheless an issue with many causal components- several theories from policy, economics and ethics may prove why Ghana policemen defied the conventional view. It may be important to note that law enforcement in Ghana has historically been the least well-paid of all government departments- and the compensatory catching-up under the new directive may not have rid the police force of its reference bias as well as a historical feeling of unfairness. Additionally, in light of an enhancement in social and financial stature, pressures from superior non-field police officers for their ‘cut’, or from demands by family and friends, may also cause redistributive pressure and an increased graft appetite on part of the highway police.
Finally, in the absence of a concurrent advent of effective anti-corruption laws, their strict implementation and a substantial increase in the number of convictions- which was the case in Ghana- increased incentives will not have the desired effects in abetting corrupt behaviour. As is the case with several policies dealing with human behaviour, liberal, incentivising legislation must be complemented by unflinching tough love by the executive.
Images Source: Own work. Fair use.
Posted by Varun Rajda » Add Comment »
The state of affairs of one’s personal finances have helped behavioural scientists model two aspects of their professional lives: to estimate the level of risk they may be willing to take at work to complement their personal risk propensity, and to signal to potential employers or relevant authorities on their reliability to adhere to regulations in the future.
Jennifer graduated at the top of her class in Purdue the same year she married her high school boyfriend. Over the next decade her life saw its ups and downs: she joined a bulge bracket investment bank in New York, moved into a charming townhouse on Long Island; she worked her way up in the trading team for institutional markets, and went through a messy, stressful divorce- during the settlement of which she was diagnosed with rheumatoid arthritis and forced to take a sabbatical from her job. Her high levels of debt brought on by the burgeoning needs of her fast-track lifestyle, multiple mortgages, medical bills and alimony payments to her unemployed husband, meant that she was back looking for high-profile jobs before she had made a full recovery.
By then her debt had caused her consumer credit score, like millions of other New Yorkers, to plummet. As of 2015, the average revolving debt for an American household is $15,609, and the average mortgage debt is $156,706. Credit card debt is now second only to student loans as the largest source of unsecured debt in the United States.
But here’s the kicker: Jennifer’s low credit score puts her at a considerable disadvantage during job interviews. FICO awards no concessions to single divorcees paying alimony, and a large number of employers have now begun to see credit history as a substitute for an applicant’s family background, reliability and a sense of responsibility. This is truer in the financial services industry, particularly for job profiles such as trading, that require employees to make quick, sometimes risky, but extremely profitable decisions on behalf of their company. If the risk pays off, a portion of profit made on the trade is awarded to the employee. Outside of employment, credit scores have also become an important point of reference when leasing apartments or purchasing a cellphone on contract.
The behavioural trigger for such risk taking behaviour is explained by a concept in behavioural economics called loss aversion: picture a visitor to a casino who has already lost $10,000 at roulette. He is more likely to take riskier bets now as compared to when he first stepped in, hoping to quickly nullify his initial loss- and being gleefully ignorant of the prospect of losing $10,000 more in the process.
It is natural for readers to feel indignant at the unfairness meted out to Jennifer. From employers’ perspective, the motivations for such discrimination can be explained by two related concepts: agency dilemma and moral hazard. The former comprises of a principal who hires an agent to make decisions on her behalf. The agent, however, is motivated to pursue his own interests, not those of the principal. A necessary condition is that there is asymmetric information between the two parties: the principal is not aware or not capable of being aware of all of the agent’s activities. The second concept – moral hazard, refers to a particular situation of the agency dilemma, where the agent engages in riskier behaviour because he is protected from its consequences.
The subprime mortgage crisis of 2008 is an example of a continuing chain of moral hazard. The players at each step of the sequence- realtors, consumer bankers, investment bankers, insurance companies, credit rating agencies and regulators- all fuelled by ever-increasing property prices, took higher risks because each felt protected from the repercussions of their decisions as long as they passed the buck up the chain. At the tipping point of the crisis, property prices started to fall and set off a chain reaction that brought the sequence of moral hazard to its worst possible outcome – a global financial meltdown.
Financial regulators have since commandeered several important legislations to minimise moral hazard. For obvious reasons these new legislations have relied on several non-conventional fields of study, including behavioural sciences- which have progressed far beyond being merely an intuitive, behind-the-scenes predictor in assessing such risk. New algorithms by leading credit bureaus attempt to model behavioural traits that predict not just one’s creditworthiness, but also how reliable they are in their personal and professional lives. The Fair Isaac Co. (FICO), for example, uses their Medical Adherence Score to predict the likelihood of a patient following through with their prescribed medication. Other bureaus use similar models to predict asset-side information of clients, which have so far been a major blind spot for the industry: the Income Insight Score by Experian uses credit and personal history to predict an individual’s income levels. Similarly, Equifax offers two products to companies to help predict potential consumers’ discretionary spending power.
The successful use of holistic personal data showcases the predictive power of behavioural models, and thus the ability of university departments and firms that deal with behavioural economics- to widen the scope of predictive analytics. Variables from one’s personal life- number of marriages or broken relationships, frequent visits to party towns and pilgrimage towns (or both), and even the extent of social media presence- may wield a substantial advantage over traditional variables that are restricted to their isolated sphere of study. Moreover, such singular risk assessment models of ex-ante moral hazard come with limitations. In France, for example, young adults whose parents have had few or no accidents (and presumably are safe drivers), are offered lower premiums for their own insurance policies. Over the years, the probability of these youth being involved in accidents has proven by studies to be equal to those youth with parents who were deemed ‘reckless’. Yet, moral hazard may explain these figures in reverse – those youth with lower premiums purchase more comprehensive insurance policies, and are thus more likely to take higher risks on the road. It is this familiar sinusoidal pattern and its moderating effects that must make Jennifer hopeful about not just about her credit prospects, but life in general.
Image Source: The Daily Omnivore/Original Owner: The New Yorker
Posted by Shekhar Menon » Add Comment »
The US presidential race is probably the most fascinating election from a behavioral science point of view. From as far back as 1920s, researchers have been studying how to get people to vote and how to get people to vote for a particular candidate. There are many accounts of how data science and behavioral science propelled Obama’s 2012 campaign. But the use of behavioral science is a two-edged sword, as Ted Cruz’ campaign just found out. Ted Cruz’ campaign was recently caught in an embarrassing position of having to defend the ‘shaming’ letters sent to potential voters in Iowa.
The letter sent to people who had not voted in recent elections showed people their ‘score’ and their neighbors’ scores based on past voting record. For added social pressure, the letter mentions that neighbors may see your score and that a follow-up letter may be issued after the election.
The letter caused an outrage on twitter with some even going on to ‘punish’ Cruz by professing support for Trump.
The interesting part was that Cruz’s campaign modeled their letters on ones drafted in a 2008 study that studied how social pressure affected voter turn out. Cruz’ letter was not far off from the most successful letter (an 8.1% lift over the baseline of 29.7% voting rate) in the study that also used voters’ and neighbors’ voting history combined with possibility of a post-election follow-up letter.
So how do we get from the nice 8.1% lift to this backlash? The answer lies in ‘context’ – insights from studies have to be contextualized for the situation or risk such failure. Though Larimer also got complaints from voters because the study, the reaction to the study may well have been muted because an independent agent with no vested interest in the election outcome was running it. Larimer, in an email to Washington Post blames the negative tone of the letter for triggering a ‘boomerang effect’. What he overlooks is that as long as the letter states “Paid for by Cruz for President”, the causal attribution for the situation would fall on Cruz (and not ‘self’, which is required for shame) and the emotion elicited may be anger rather than shame.
Image credit: Braddock Massey on Twitter
Posted by Biju Dominic » Add Comment »
Yet another government, this time the government of Kerala, is trying to solve the problem of alcoholism through the prohibition route. They have taken the first step in that direction by closing down all bars except the five star hotel bars across the state. Being a Malayalee I know that alcoholism is a big problem in my home state. Given the socialist past of our country we always look up to the state to take care of its citizen’s problems. So when a problem as intense as alcoholism spreads across the state, it is obviously seen as the state’s responsibility to find a solution to the problem. Many an astute politician has understood this and have used ‘finding solutions’ for the alcoholism problem as an excellent vote catching strategy, more so among the women voters. With elections just a few months away the politicians in Kerala too are not going to be any different.
[Read more →]
Posted by Alok Gangaramany » Add Comment »
The Paris attacks have been a major shock and we are understandably upset. Most of us have been reminded of some of the earlier acts of terror such as the 26/11 attack in Mumbai or even 09/11 in New York. It also reminded us of the mixed emotions (fear, anger and despair) that we felt during the attacks.
Since the earlier attacks were also targeted at civilians, we consider this act in the same vein. However, this Atlantic Article – What ISIS really wants suggests that, maybe, this attack is different. The article refers to the origin of the Islamic State from al-Qaeda, the formation of its leader al-Baghdadi, its strong belief of being a key agent of the apocalypse and many other qualities. But the most important point that it tries to make is that ISIS is not like al-Qaeda or any other organization that we tend to categorize as terrorists. The author suggests that we seem to have misunderstood jihadism as monolithic or of a single kind which it is not.
We can probably call this a problem of categorization or essentially mis-categorization.
[Read more →]
Posted by Alok Gangaramany » Add Comment »
As per the recent NY Times article, one of the biggest human experiment “One-Child Policy” has come to an end.
The policy came into effect in the 1970s as a response to the concern that the population growth was impeding economic growth. The reversal seems to be a response to a new problem – aging of the population.
The ethics and rationale behind such government interventions have been and will continue to be debated in the public policy and macroeconomic circles. But lets view this problem from a different lens – dealing with a wicked problem.
[Read more →]
Posted by Shekhar Menon » Add Comment »
How do you feel about these two Gillette razor blades? Do you like one over the other? Which one would you use?
Though they may seem very similar except for the very obvious color choice, I feel that there will be a big difference in the way the two are used. The key is the color.
The one on the left, designed for Gillette Fusion razors, was launched earlier. The one on the right, designed for Gillette Fusion Power razors, was an enhancement to the product line. Thoughtfully or not, the designers have hit upon a great idea.
[Read more →]
Posted by Biju Dominic » Add Comment »
Human beings have a fundamental problem – we are unwilling to connect the future with what is required of us in the present. The future is uncertain. Instead of inspiring caution, our brains’ typical response to this uncertainty is to sharply reduce the importance of the future in our decision-making, an effect Behavioural Economists call ‘hyperbolic discounting’. We discount larger future gains for the sake of smaller, but more immediate ones. Consequences which occur at a later time, good or bad, tend to have a lot less bearing on our choices the more distantly they fall in the future – even when one’s life is at stake. One of the large global initiative most affected by hyperbolic discounting bias is the conservation of environment.
[Read more →]
Posted by Divya Balakrishnan » Add Comment »
Behavioral Economics is garnering more and more attention everyday. As it should be – the brain subscribes heavily to heuristics and mental models in order to process information efficiently. Our preferences are highly malleable and are usually constructed on the fly – which is why any field studying descriptive decision making would be incomplete if it didn’t take into account the effects that the decision context and decision frames have on our choices. Which is all very good for Behavioral Economics.
Daniel Kanhneman, Richard Thaler, Senthil Mullainathan, amongst many others drive this field and are creating a massive shift in thinking across several domains in classical economics – savings, investment, wealth, losses, gains. The definition of Behavioral Economics is wide. “It studies the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences.” However, whilst the definition mentions ‘Emotional’, the reality is that the literature on Behavioral Economics falls painfully short when it comes to Emotions. System 1 & System 2, Prospect Theory, Choice Architecture, Choice Bracketing, Heuristics and Biases – whilst talking about how human beings are ‘economically irrational’ and the role of emotions in decision making, barely scratch the surface of the nuances of the Emotional System. Which is a pity, because Emotions do not merely play a role in Decision-Making, they guide the decision-making process. There are no decisions that are devoid of emotions, even ones that might seem extremely calculated and ‘rational’. We’ve written about the omnipotent role of Emotions before, here.
The brain is continuously appraising our larger context, the surrounding environment and stimuli, and basis these appraisals – which could be non-conscious, or completely deliberative, the emotional system responds – determining action tendencies, and ultimately actions. These emotional responses clue us in on the values we attach to things and our motivations. People with damaged emotional circuits are severely hampered in their ability to make even the simplest of decisions. The essence is not in the simplicity of emotions as we colloquially understand but in the complex determinants of emotions. In understanding the role that aspects like Individuals Goals, Relevance to Decision Maker, Self-Image, Sense of Control, Ability to deal with the Outcomes play. The handles that these provide in explaining decision making, understanding behavioral outcomes and influencing preference changes are invaluable.
Lets talk about Investing – To Buy or Not is driven by two dominant emotions that come into play and drive all decisions. The ‘Fear of Losing’ and the ‘Fear of Losing Out. Fear all the same. With all its positives and ramifications when fear has only cognitive underpinnings. Whilst Behavioral Economics talks about this aversion to loss, the emotions behind it – the aversion/avoidance that are driven as a result of Fear and anxiety are not detailed. Whilst felt Emotions are a huge driver of decisions, Anticipated Emotions are an even stronger influencer – anticipation of gains, losses, happiness, sadness, loss of control are very very powerful and are strong elicitors of Preference Reversals. Again, a lot of the Heuristics and Biases that Behavioral Economics talks about are driven fundamentally by Uncertainty – another powerful emotional mediator. Our decisions might not maximise economic utility, but are most often maximising emotional utility.
For Behavioral Economics to become more powerful and impactful, therefore, there is an immediate need to place emotions at the centre of this conversation so one is able to see the source of heuristics that drive our behavior and then work on one or more dimensions of the emotional determinants to influence decision making and behavioral outcomes. At FinalMile, studying these emotions is central to our process. We use insights/learnings from Cognitive Neuroscience as well as Behavioral Economics, to design our EMGRAM framework which allows us to make sense of the Emotions associated with any problem Context.
- Written with Anurag Vaish