Long Run Effects of Nudging on Preference Formation in India

Abstract

Nudging is now a well-established policy instrument in behavioural economics, capable of influencing consumer choices without removing options or radically altering financial incentives. Applications and considerations of nudges have been explored in the fields of sanitation, health, financial inclusion, energy consumption, tax evasion, gender equality, and public service delivery in India. Whilst the majority of nudge studies have focused on effects on people's immediate behaviours, it has been less common to study whether nudges lead to long-term changes in their preferences, habits, values, and social norms. This paper attempts to investigate the change in preferences over time in India due to nudges. It suggests that numbers may have effects on preferences when repeated, visible to others, culturally appropriate and supported by institutions. The nudges could facilitate not only personal change, but over time influence what people consider to be “normal,” “desirable,” “respectable,” or “morally acceptable.” In India, nudges can affect individuals' choices and can also eventually lead to changes in what is considered “normal,” “desirable,” “respectable”, or “morally acceptable” in the context of family, caste, religion, and community norms and state programs. The paper identifies some potential hazards, among these: superficial compliance, external triggers, manipulation, and non-uniform effects on social groups. It concludes that nudging in India can help in the long-term formation of preferences; however, this is not without the involvement of a wider education, drivers, infrastructure, trust, and social support system that facilitates the desired behaviour.