The Rise of the Psychological State in Asia: Nudging 4.6 Billion People

In the UK, a simple letter improved tax compliance. “You’re one of the few people in your area who hasn’t paid,” it read, and suddenly the cheques started rolling in. It wasn’t a threat, nor a penalty—just a nudge. Inspired by this experiment, in 2015, President Obama signed an executive order that created a behavioural science unit within the oval office. Introduced by the UK’s Behavioural Insights Team which employs principles of behavioural economics—subtle tweaks designed to encourage individuals to make better decisions, such as saving for retirement or ensuring timely tax payments. The US adopted a similar approach with much optimism and flair, citing cost-effectiveness as its reason. 9 years later, the unit has quietly vanished, and the behavioural economics research that supported its efforts is now caught in controversy. Research utilised by the Obama administration, including work from well-known figures like Dan Ariely, has been revealed to be fabricated. But while the Anglo-American region seems to reassess the promise of nudges, Asia is taking them up with gusto. Countries like Singapore, India, and even Pakistan are placing bets on behavioural insights to solve deeply entrenched problems.

Currently there are over 600 behavioural public policy (BPP) bodies operating globally in 2024, of which 322 are government bodies. Since the introduction of Thaler and Sunstein’s Nudge in 2008, nudge units have mushroomed across the world. Nudge units first became well-known following the founding of the Behavioural Insights Team (BIT) in 2010. The prevalence of these nudge units, as noted by Prof. John notes in his 2019 paper, have been concentrated for the most part in Anglo-American and Western European nations. However, there is a growing trend within Asia. In addition, Prof. John observes that the adoption of nudge unit within governments is in liberal or centrist democracies where stable political systems, effective governance, and high public trust provide a fertile ground for behavioural policies. However, adoption in Asian regions sees more diversity in political systems, from democratic regimes of India to authoritarian regimes of Pakistan. To understand this growth, we need to first understand their origin.

Origin and the Rise of Nudge Unit:

The failure of the traditional and efficient economic models post the 2008 financial crisis was a major catalyst for the establishment of nudge unit. The subsequent economic austerity forced governments to seek low-cost policy interventions. The appeal of nudges provides a low-cost alternative to traditional interventions such as taxes or regulations. The emphasis on cost-effectiveness and efficiency had resonated with the conservative political agenda of the times. The policy makers, who aimed for quantifiable results without significant budgetary expenditure, found nudges quite appealing because of their convergence of interests with fiscal conservatism. Nudge originated and gained acceptance in part thanks to political champions as well. Advisor to Prime Minister David Cameron of the United Kingdom Rohan Silva suggested nudging as a creative and pragmatic approach fit for the Conservative Party’s constrained yet efficient perspective. The middle ground appeal of nudging was helping people to make better decisions for themselves rather than enforcing forceful demand or control. Their philosophical flexibility and political appeal derived from this conception helped them to be pushed across party boundaries. The crisis left a void in which rival systems fought for supremacy. One strong competitor is behavioural economics, which presents a convincing critique of rationality and offers reasonably priced remedies. Policymakers started to view behavioural observations as a tool not only to explain the crisis but also to create fresh ideas for government.

Apart from the early success of UK’s Behavioural Insights Team (BIT), publishing of popular books like “Nudge” in 2008 greatly helped to increase knowledge and public debate on behavioural economics and its possible influence in public policy. Even if it was rapidly embraced, the idea of nudging was not without controversy. Critics raised moral questions, arguing that even minor behavioural change by the government could be considered pervasive. Others questioned their ability to address the policy challenges, pointing out that while nudges could be helpful in some situations, they generally fell short of systematic needs. Still, the early BIT rhetoric supported the growth of analogous institutions worldwide. Endorsements of international organisations as the World Bank, UN, and OECD who encouraged the use of behavioural insights in policy. This further facilitated the spread of nudge units globally.

Adoption in Asia:

Asia is greatly divided on the adoption of behavioural insights, from completely formalised nudge units in countries like India and Singapore to more informal, context-driven applications in countries like Korea. This raises a crucial issue: why do some countries establish specialised behavioural units while others adapt these ideas into existing structures? Governance needs, cultural norms, and institutional decisions. Singapore stands out as a model of formalisation, with its high public trust and efficient bureaucracy enabling the seamless integration of behavioural insights into policy. The country’s formal nudge unit has achieved success in areas like health, sustainability, and financial habits, demonstrating how strong institutions can amplify the impact of behavioural science.

On the other hand, In India, there is no formal nudge unit. NITI Aayog, the apex thinktank of Indian government, in 2019, partnered with Ashoka University to establish the Behavioural Insights Unit, which has worked on various projects. Japan, on the other hand, has tailored its behavioural interventions to address generalisability of desired behavioural changes in sectors like environmental and demographic challenges. Japan has both a national level and localised behavioural Insight Unit.

Unlike Singapore and Japan, where the adoption is mostly dependent on trust and a coherent institutional framework, India’s great cultural and regional variety calls for decentralised and personalised solutions, which might be difficult to carry out. The varying acceptance of behavioural insights across Asia not only reflects the political and cultural diversity of the region but also raises questions about ownership and sustainability. While formal systems provide clear institutional frameworks and stability in countries like Singapore and Japan, they largely rely on high trust and cohesiveness among citizens. In countries lacking institutional stability or public confidence, nudges may be perceived as manipulative and thus less effective. South Korea and China offer other perspectives in this conversation. Though they lack official nudging units, both nations have incorporated behavioural ideas into their policies. Although this presents significant ethical and transparency issues, China’s application of behavioural insights in public health and its other sectors, demonstrates the integration of behavioural science into government-led initiatives. South Korea proves that creating distinct institutions is not essential for implementation since it effectively used behavioural insights for changing public perception of its civil servants.

These examples illustrate that the integration of behavioural governance into local governance systems determines its effectiveness more often than formalisation. In high-trust countries like Singapore and Japan, nudges can be more readily used cooperatively. Low-trust settings like India, on the other hand, face more resistance and require more complex, dispersed strategies. Adoption is heavily influenced by cultural factors. For instance, collectivist countries such as South Korea and Japan often respond favourably to measures emphasising societal benefits. Different democracies, like India, however, call for tailored approaches that consider regional and socioeconomic disparities.

The decision to formalise nudge units finally raises significant questions about political culture, government capacity, and how faithfully behavioural science can adapt. While formal units can provide coherence and visibility, using informal approaches might offer more adaptability and responsiveness to local requirements. Regardless of the method used, the primary challenge is ensuring consistency, openness, and ethical applicability. The success of behavioural governance in Asia depends on the ability of these various approaches to develop into sustainable systems that address both immediate policy concerns and long-term issues.

Thus, the rise of nudge units in Asia highlights an innovative yet complex interplay of global influence, local cultural dynamics, and policy priorities. Unlike in Western contexts, their success in Asia rests not only on technical application but also on navigating diverse political systems, varying levels of trust in government, and deeply ingrained cultural norms. Countries like Singapore and Japan demonstrate how centralised, technocratic governance can seamlessly integrate behavioural insights into policymaking, while India and Pakistan exhibit both the potential and challenges of decentralisation and external collaborations. However, for these units to be effective, they must address important gaps, such as the need for greater local support, ethical interventions, and flexible frameworks that cater to a diverse population. Questions about their effectiveness remain, warranting further research.

As the rise of nudge units in Asia continues to grow, the question remains whether these actually work or if they are merely window dressing for actual efforts.