The economic survey 2019 emphasised the importance of social, cultural and religious norms in producing “desirable” behavioural changes and therefore “desirable” macro outcomes. It has proposed the use of culture and tradition on several fronts such as gender equity campaign etc. Survey emphasizes on the religious basis to back the righteousness; moral suasion.

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Indian culture is complex mixture of several religions (Hindus-79%, Muslims-14.2%, Christians-2.3%, Sikhs-1.7%). Every religion has its own set of teachings and values which guide the beliefs and attitude and influence their behavior of the followers.

The survey points to a number of mythological and traditional motifs, discusses in detail Mahatma Gandhi’s concept of “seven social sins”, and gives examples of “moral” behaviour from Hindu, Islamic and Christian traditions.

Behavioural Economics: The Economic Survey 2019 has drawn on Nobel Laureate Richard Thaler’s Behavioural Economics Theory to lay out what it describes as an “ambitious agenda” for behaviour change that will bring in social change, which in turn, will help India transit to a $5 trillion economy by 2024-25. Given our rich cultural and spiritual heritage, social norms play a very important role in shaping the behaviour of each one of us.

Moral suasion is the act of persuading a person or group to act in a certain way through rhetorical appeals, persuasion or implicit threats, as opposed to the use of outright coercion or force.

Use of Moral Suasion in Economic Survey:

• In the Hindu tradition, the Survey says, the non-payment of debts is a sin. If a person dies indebted, his soul may have to face adverse consequences. In such an event, it is the duty of the errant debtor’s children to save his or her soul.
• This duty or obligation of a child to repay the debts of the deceased parent is rested upon a special doctrine, known as The Doctrine of Pious Obligation.
• The Survey also cites an Islamic injunction on paradise being barred to those who haven’t cleared their debts, with the addendum that heirs could pay on their behalf if the money left behind by the deceased proves insufficient.
• Christian tenets have also been quoted. The Bible, the Survey notes, says, “Let no debt remain outstanding except the continuing debt to love one another,” and “the wicked borrows and does not repay, but the righteous shows mercy and gives.” Even if it’s part of a broader thrust aimed at framing policies that seek to modify the behaviour of people, such a discourse in an official document is rather unusual, to say the least.
• The survey talks of using religious custom, social norms and cultural traditions to make people pay taxes, keep young people away from alcohol and drugs and engineer gender equality.
• The concept of Ardhanareshwar – half male, half female representation of Lord Shiva – examples of super-achieving women such as the prophetess Gargi, who questioned the origin of all existence in her Vedic hymns, and Maitreyi, who rejected half her husband’s wealth for spiritual knowledge, could be used to reinforce the message of gender equality.

Yes, Moral Suasion works:

• Religion is deeply ingrained in Indian society, be it in people’s personal lives or the nation’s polity.
• Images of deities are often put up on walls and other objects in public places to deter vandals.
• They can have a powerful impact on our biggest societal challenges.
• Across all religions, positive mythological insights about gender and caste equality as well as universal brotherhood have been available and deeply understood in Indian society since the ages.
• So, repeatedly reinforcing examples of people following these positive sentiments as truly spiritual people can help establish the correct social norm that serving man is serving God.
• The Good Samaritan guidelines of the Central Government and the policy adopted by several State governments, where people who help road accident victims receive a monetary incentive and an appreciation certificate, leverage behavioural insights to reinforce the correct social norm of selfless service of mankind.

No, Moral Suasion could fail because:

• In a country of India’s diversity, debt itself has varied views. Usury, for instance, is a sin in the Christian and Islamic traditions, and this is sometimes interpreted as a ban on interest charges per se. The diversity of the country means that what works in one state may not work in another
• Modern liability limitations have been found to help encourage the risks that businesses must take to generate returns.
• Stirring up thoughts of divine retribution on matters of money could have unforeseen results.
• It relies on individual choice instead of overt state intervention.
• Discoveries about the past from behavioural experiments do not easily generalise to the future -the social context for one generation is often different from another.
• Behavioural economics is, however, not a panacea to policymaking; its potential needs to be understood and put in perspective.
• Nudge policies cannot and should not supplant every incentive-based and mandate-based policy. For example, a policy that merely nudges people to refrain from assaulting others will fail as such situations warrant strict decree or, at least, a stronger push than a mere nudge.
• nudge units may fall prey to a paternalistic view that planners know better than citizens despite the fact that public policy designers have the same behavioural quirks that other human beings have.

Way forward:

• Behavioural economists should take on economic problems that have begged solutions for long. Any success on this front will establish the applicability of behavioural economics to tough challenges.
• Behavioural economics should be taught in many more educational institutions.
• Behavioural economists have shown that people prefer avoiding losses compared with making gains.