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Can 'nudge theory’ change citizens’ behavior, government policy in Lebanon?

An upcoming conference on behavioral economics in Beirut will examine a political tool that could shape national policies and improve public services.

BEIRUT — A conference scheduled for May 11-12 will reflect on the initial impact of a potentially powerful new political tool in Lebanon — a branch of behavioral economics called "Nudge."

Fadi Makki, an expert and adviser in public policy and the founder and director of the Qatar Behavioural Insights Unit and Beirut-based nongovernmental organization Nudge Lebanon, is the first person to formally apply the Nudge theory in the Middle East. He described it to Al-Monitor as a “beautiful combination of psychology and economics with the potential to change citizen behavior and government policy.”

Pioneered by Nobel Prize-winning economist Richard Thaler and academic Cass Sunstein in the book “Nudge: Improving Decisions about Health, Wealth, and Happiness” (2008), the economic theory espoused by Nudge Lebanon is based on the concept of “choice architecture,” which leverages human psychology to influence and alter citizens’ behaviors and decisions without stripping them of individual agency.

Nudge uses randomized control trials to test different approaches and find the most effective ways to influence people’s behavior, in a process Makki describes as “changing contexts to steer people gently in the right direction … without taking away other options.”

For example, a recent experiment conducted in Lebanon showed that the amount of plastic cutlery sent with take-out food was reduced by 77.9% when call center staff used a simple verbal nudge, asking each customer if they needed cutlery and reminding them of its impact on the environment, rather than sending it automatically with each order.

In the 10 years since the publication of Thaler and Sunstein’s book, Nudge has been adopted by dozens of governments and policymakers. Makki estimates that there are currently more than 200 “Nudge units” operating worldwide. Since founding Nudge Lebanon in February 2017, he has devised several experiments designed to improve adherence to existing laws and to help establish effective future policies.

In October 2017, Nudge Lebanon was awarded a $500,000 grant from the Carnegie Corporation to set up the first Arab Consumer-Citizen Lab, which aims to launch courses in behavioral economics at universities across the Arab world, including the American University of Beirut and Hamad Bin Khalifa University in Qatar, and promote the use of Nudge to shape national policies and improve public services.

Six months on, the first Nudge conference, set to take place at the American University of Beirut on May 11-12, will take stock of the regional impact to date amid news that countries including Egypt, Jordan, Kuwait, Saudi Arabia, Tunisia and the United Arab Emirates are planning to set up Nudge units.

More than 25 speakers will address topics including the growth and future of behavioral economics in the region and its application in the fields of health, environment, education, and financial and social inclusion.

Makki told Al-Monitor that Nudge is a particularly efficient tool in Lebanon, where the traditional approaches to law enforcement — punishment and reward — are often inefficient, in part because both require costly monitoring and enforcement. Nudge — which he calls “the third way” — is cheap and effective, based on research rather than intuition.

“We are obsessed with compliance and rule of law because a lot of our problems have behavioral roots and can be improved with interventions that clearly understand the behavior,” he said. “We work on education, health, financial inclusion, prevention of violent extremism, improving entrepreneurship and so on.”

Nudge Lebanon is currently working on creating efficient Nudges that could help improve compliance with traffic laws, reduce littering and corruption, and promote sustainable practices such as recycling and saving water and electricity.

Randomized control-testing, Makki told Al-Monitor, is the key to differentiating between a policy that is doomed to fail and one that will have the desired effect, taking into account the fact that human beings do not always make rational choices.

“We have been applying them for years in clinical trials, and we have been applying something similar in marketing — to get people to buy things. … But for policies we have not been using all we know about people’s behavior; we have been ignoring it,” he said.

Nudge is “not about what people say they will do, it’s about what people actually end up doing. And understanding why they do it, and not making assumptions about it.”

A recent experiment in Sidon, in the south of Lebanon, provided some insight into Nudges that work efficiently. Nudge Lebanon carried out a randomized control trial with four groups to try to find the most efficient way to encourage people to pay their electricity bill on time.

The first control group received the regular bill, serving as the baseline against which to judge the other experiments. The second group received a notice reminding them of the penalties for late payment, which resulted in a 5% payment improvement. The third group received a notice stating that 90% of their neighbors paid their bills on time, which yielded a 13% improvement. The final group received a notice bearing a picture of the Lebanese flag and appealing to their national pride by stating that good citizens pay on time, resulting in a 15% improvement.

“We’ve seen it in the United States with energy consumption, in Costa Rica with water consumption, in Guatemala with tax collection — using social norms does work. … So that is something we think is very powerful and that could … make improvements maybe in traffic violations, in littering,” Makki noted. “Sometimes people misunderstand a Nudge as a panacea. The objective is not to solve the entire problem but to make measurable improvements.”

Each trial impacts only a small number of Lebanese citizens, but eventually Nudge Lebanon hopes to scale up successful interventions to cover the entire country, through collaborations with ministries and NGOs.

However, as with any tool that depends on psychological manipulation, there are inherent risks. The capacity for Nudge to be misused — for instance, by fabricating statistics and using them to influence behavior — is self-evident.

“As the region wakes up to Nudging, we need to make sure that the right standards and the right rules are in place to make sure people don’t misuse it,” Makki said. “If you give smart people who have a tendency to do bad things these tools, they could definitely do bad things with them.”

Makki’s solution to this potential problem is to ensure that a strong code of ethics is established early on by practicing complete transparency, reporting every experiment and the results of every trial, even those that were inconclusive or unsuccessful.

“As more people come into this, we want to make sure that they come equipped, they comply with certain standards of transparency, of ethics, and they Nudge for good,” he said.

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