Chee Hean: Considering people's attitudes and behaviours is key to good policymaking
Sue-Ann Chia, Straits Times 27 Jun 08;
GETTING people to drink reclaimed water - Newater - worked. But getting people to marry and have babies is still stuck in infancy.
The tale of two government policies - one that took off, and the other, still unproductive - is reason for the Government to pay greater attention to how attitudes affect decisions when forming policies.
Minister-in-charge of the Civil Service Teo Chee Hean said this yesterday when addressing an inaugural global behavioural economics forum organised by Gallup, the international polling organisation.
About 250 people, half of whom were civil servants, turned up to listen to speakers, including Nobel laureate and psychology professor Daniel Kahneman, speak on how behavioural economics impacts society.
Mr Teo, who is also Defence Minister, launched the forum by noting that behavioural economics applies insights from psychology to the study of economics.
'It is a field that holds promise for advancing policymakers' understanding of the likely impact and result of their policies,' he said.
The Civil Service College has begun to introduce these ideas to the public sector. The college, he noted, aims to make behavioural economics a key part of the skills set for policymakers here.
Explaining behavioural economics, he noted it differs from conventional economic theory, which starts with the assumption that people aim to maximise individual self-interest.
'Blindly applying this assumption to policy problems can sometimes lead to unrealistic analysis or even inappropriate solutions,' he said.
Behavioural economics, on the other hand, believes that people do not always act in completely rational ways. They can be influenced by social norms and by people around them.
This means that policymakers should consider how they can shape social norms to achieve intended outcomes, he noted.
He cited the way Singaporeans were persuaded that Newater is acceptable for drinking as an example.
'At one level, gaining acceptance was about appealing to the rational mind of Singaporeans by quoting the facts and the figures, and the science,' he said.
'But the key to overcoming the 'yuck' factor was building trust and social acceptability.'
But he conceded that urging Singaporeans to marry and procreate has 'not yet been successful', in spite of various financial incentives and campaigns since 1987.
Clearly, this is an area where behavioural economics can help, he said, adding that he hopes to report progress in the coming years.
Mr Teo also pointed out that policymakers here have already been using the concepts of behavioural economics in policies such as the national annuity programme CPF Life.
One insight of behavioural economics is that people are strongly influenced by the 'default' options they face. Applying it to voluntary pension schemes, this means they have a higher chance of success when the default is for people to be included unless they opt out.
Hence, for CPF Life, policymakers decided that the 'default' would be a standard plan which would be appropriate for most Singaporeans. But they also get a choice of other plans.
Speaking at the same forum, Mr Lim Siong Guan, the former head of the civil service, also emphasised the importance of understanding people's psychology and behaviour when formulating government policies.
'It does not matter what the policy intent is in the memorandum to the Cabinet: what the public sees and feels and experiences is...what the policy is about,' he noted.
Policymakers changing the way they deliver messages, says Minister Teo
Channel NewsAsia 26 Jun 08;
SINGAPORE: Defence Minister Teo Chee Hean said policymakers are changing the way they deliver their messages - instead of the usual carrot-and-stick approach, they are favouring a softer method to help shape public attitudes.
Mr Teo, who is also minister-in-charge of the civil service, was speaking at the Global Behavioral Economics Forum, organised by polling company Gallup on Thursday.
He used NEWater as an example to explain how policymakers persuaded Singaporeans that recycled waste water was safe to drink.
"At one level, gaining acceptance was about appealing to the rational mind of Singaporeans by quoting the facts and the figures, and the science. But the key to overcoming the 'yuk' factor was building trust and social acceptability."
Another example is CPF Life, where Singaporeans were offered options - which made it easier for them to accept the annuity scheme.
However, sociologist Dr Paulin Straughan pointed out the danger of this approach is that in the long-term, it could lead to over-reliance on the government and loss of creativity.
She said: "On one hand, there'll be your usual complaints about too much regulation... On the other hand, when something goes wrong they'll say, 'Fine, raise the fine! Have some more rules! Where are the policemen when you need them?'"
To encourage people to get married and have children is one area where the government has yet to be successful.
Dr Straughan said society is at a point where expectations of women's roles and parenthood are constantly changing, so the type of message and the way it is sent out are important. - CNA/ac
It’s normal to be irrational
Policies should make room for such behaviour,say psychologist
Neo Chai Chin, Today Online 27 Jun 08;
HUMANS do not always behave rationally, but much as their irrationality complicates policies, governments and decision makers must sit up and pay attention, said psychologists — including a Nobel laureate — at the first-ever Global Behavioural Economics Forum yesterday.
Behavioural economics (BE) is the discipline that merges Psychology and Economics, and it could help explain some uniquely Singaporean case studies, such as the success of Newater and the structure of the upcoming CPF Life annuity scheme.
That is because the authorities here already practise BE, for example, by favouring soft approaches instead of just a carrot-and-stick policy, Defence Minister Teo Chee Hean said in the forum’s opening address yesterday.
“Policymakers in Singapore may not have used the termsbehavioural economics or cognitive biases, but they were certainly putting these concepts to good use,” said Mr Teo.
To get more people recycling and fewer people to litter, jaywalk or drink-drive, “policy makers cannot only look at incentives or disincentives, but must also look at shifting preferences and norms over the longer term”, he said at the forum held at Meritus Mandarin hotel.
Another example: People are often unable to make complex cost-benefit calculations that conventional economics thinks us capable of. So, even though the CPF Life Scheme offers a dozen plans for people to choose from, the Government decided that “the default would be a standard plan which we think would be appropriate for most Singaporeans”, said Mr Teo, who is also Minister-in-charge of the Civil Service.
Moving forward, BE could help in the Government’s push to promote marriage and parenthood, he said. In spite of financial incentives and campaigns, our fertility rate remains below 1.3 — a sign that the campaign “has not yet been successful”.
Offering some reasons for people’s irrational behaviour, Nobel laureate Dr Daniel Kahneman of Princeton University said humans tend to take a narrow view, failing to consider all factors before making our decisions.
We also tend to practise “loss aversion”, where the pain of giving something up is greater than the pleasure of gaining something; it could explain why Singapore successfully reduced its birth rate in the ’70s (through penalties), but has less success now in getting people to have more babies (through campaigns and incentives).
Gallup’s chairman and chief executive Jim Clifton also asked Mr Peter Ong — Gallup’s managing partner in Singapore, Hong Kong and Southeast Asia — why Singapore seemed to be one of the few nations currently practising BE.
One reason could be “political longevity”, said Mr Ong. Political stability allows the Government to plan “20 to 30 years ahead” and to be more willing to “experiment in a small way” — in areas like car ownership and road usage, for instance — before implementing policy on a larger scale.
