Behavioural economics
M essenger – we are heavily influenced by who communicates information. I ncentives – our responses to incentives are shaped by predictable mental shortcuts such as strongly avoiding losses. N orms – we are strongly influenced by what others do. D efaults – we ‘go with the flow’ of pre -set options. S alience – our attention is drawn to what is novel and seems relevant to us. P riming – our acts are often influenced by sub-conscious cues. A ffect – our emotional associations can powerfully shape our actions. C ommitments – we seek to be consistent with our public promises and reciprocate acts. E go – we act in ways that make us feel better about ourselves.
These guidelines are heavily involved and used when governments around the world are trying to create behavioural policies as is evidenced by the correlation between M for messenger and the use of taxi drivers to spread safety information.
There are many policies and recommendations that are being used however many of them seem to be somewhat contradictory. For instance, VAT cuts seem to suggest the Government wants us to go outsidemore and spendmoney in the economy, but this is counteracted by constant reminders to avoid large groups of people as much as you can. These policies also represent both standard (tax reduction) and behavioural policies. The contradiction shows the government ’ s struggle to balance the need to try to reduce the spread and maintain safety whilst also ensuring that the economy of the country isn’t severely affected in the long-term. ‘Eat Out to Help Out’ is one of the new schemes that combine both standard and behavioural policies and tax. The scheme is encouraging people to go out to eat, but through targeting traditionally low turnover days of Monday-Wednesday, mitigates the contagion risk. All countries around the world are attempting to deal with this balance, and the way they do so has been various, with somemore effective than others. Early indications are that the UK’smethod has been relatively successful, as it handles both those who are isolating by encouraging this behaviour but also those who want to go out are being encouraged to spend more across a broader timeframe than they would normally do, thus reducing the economic impact. Many countries reacted more quickly and effectively than others. However, that did not necessarily guarantee long term success in containing the virus. Looking at Singapore as an example, whilst it was hailed as an early success in effectively bringing the virus to heel, when it relaxed its restrictions problems began to arise. This was driven by the high levels of interconnectivity and globalization of the Singapore economy. The high number of migrant workers who lived in cramped living accommodation in Singapore and who travelled to other countries that weren’t as effective as Singapore at quellin g the virus initially led to a second wave of the virus. Singapore was forced to introduce a much harsher lockdown which impacted the economy significantly harder than the first wave. As behavioural economics focuses on many areas it allows for otherwise unconsidered factors to be brought forth and thus affect the way the government might structure their policies. Governments now need to take into account certain behavioural factors, such as the potential for ‘fatigue’ , and the idea that the public’s willi ngness to adhere to quarantines might decrease over time. The implied logic was that asking less of the public this week could buy greater willingness to comply further down the line when it is most crucial. As each country has reacted differently and at different times, it allows for other countries to be used as case studies around the impacts on the psyche of the citizens due to any given
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