GCC states are engaged in ambitious national transformation programmes that depend to a considerable extent upon people making different choices. Improving national health levels, to use just one example, involves people adopting healthier eating habits and leading more active lifestyles — an area where traditional policymaking methods like applying fines, incentives, or taxes are not always effective as standalone tools.
The answer may lie with behavioural science. Over the past decade, the use of behavioural science in policymaking has become mainstream in many governments who are increasingly using this new science to achieve a common good. In fact, behavioural economist Richard Thaler won the 2017 Nobel Prize in Economics for pioneering behaviourally-informed policy design.
The field combines insights from economics, psychology, sociology, and neurology to understand what makes people tick. It explores beliefs, attitudes, and emotional triggers that make them less sensitive to rules, regulations, incentives, and penalties — even when this goes against their self-interest. It then designs interventions that nudge people toward the common good, without restricting their freedom of choice.
To succeed, behavioural interventions should be tailored to specific social and cultural contexts, and combined with conventional policy levers and a supporting infrastructure. They involve relatively low-cost tools that include slight variations to messaging, leveraging role models, initiating peer comparisons, or applying gaming principles (e.g. competitions, trophies) as incentives.
These behavioural interventions are not a silver bullet, but GCC governments can still utilise them to improve interactions with their citizens and address key national challenges related to health, environment, parenting, women’s empowerment, and consumer protection, to name a few.
For example, GCC policymakers could utilise behavioural science to promote their national health agendas. As lifestyles in the GCC are becoming more sedentary, people’s risk of contracting diseases related to lack of exercise or unhealthy eating is increasing. Strategy& estimates that GCC countries spend nearly $36 billion (Dh132.23 billion) annually on treating such diseases, including diabetes.
In response, GCC governments could use role models to promote sound diets or turning exercise into games or competitions. Singapore, for example, incentivised people to walk more by encouraging them to post their achievements on social media to win prizes. Such tools can prove to be powerful complements to more conventional policies like sugar taxes or wellness programmes.
GCC governments could reduce water and electricity over-consumption by instilling sustainable consumption patterns in households. This includes reducing shower time, turning off air-conditioners and other appliances in empty houses. In fact, Saudi Arabia and the UAE, the region’s largest consumers of water, use 10 and 39 times the amount of renewable water available to them, respectively. Moreover, in 2017, over 70 per cent of GCC houses had inadequate insulation and operated some 25 million low energy efficiency air-conditioners.
One potential solution could be to highlight the level of subsidy in utility bills, compare bills between households, or launch national awareness campaigns to inform people about the environmental impact of overconsumption. In 2014, Egypt reduced electricity demand by teaching consumers to be energy efficient — through turning off unused appliances or setting air-conditioners to the right temperature, to use just two examples.
These methods should be accompanied by conventional policy tools such as smart meter introduction, implementing national energy efficiency standards, and subsidy reduction.
Similarly, behavioural insights can encourage compliance with the value-added tax (VAT), which now applies in Saudi Arabia and the UAE. Adjusting to the new tax could prove challenging for companies accustomed to a low- or no-tax environment.
GCC governments can look at the work of the Behavioural Insights Team (BIT) in the UK for a successful example. The BIT reworded communications to late-paying taxpayers, nudging them with messages like “The great majority of people in your local area pay their tax on time”.
This produced both an increase in on-time payments and millions of dollars’ worth of revenue. Such messages, appealing to conformity with social norms, will need to be accompanied by the customary fines for tax evasion and businesses that use VAT to overcharge customers.
Integrating behavioural science in policy design is a new concept in the GCC. Successful integration requires each government to set up a behavioural insights unit dedicated to commissioning interventions. These units will start building up their capability by taking advantage of established institutions and experts’ skills, then partner with governmental organisations, academia, and the private sector in a bid to scale up their interventions.
Standard policy levers will not suffice if GCC governments want to unlock truly transformative change. Instead, they will need to appropriately channel the power that behavioural insights can bring into familiar policy tools.
— Fadi Adra and Yahya Anouti are with Strategy& Middle East. Samer Dada and Philippa Clayre are at WPP Middle East and North Africa.