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Nudging Lebanon in right direction.

Summary: Fadi Maki is the man looking to subtly encourage Lebanon into making better choices, using the rising star of economic theory -- nudge.

BEIRUT: Fadi Maki is the man looking to subtly encourage Lebanon into making better choices, using the rising star of economic theory -- nudge. The relatively new school of nudge economics brings together behavioral science, public policy and psychology to affect decision making to subtly shift people's choices and habits.

Maki told The Daily Star in a recent interview at his offices in Beirut that he believes the idea has wide-ranging applications for Lebanon. "[It's about] shifting environmental elements so that people can be gently steered in the right direction ... [in a] cost-effective way, without forcing them into something," Maki said. The cost-effective nature, he said, was particularly important in the Middle East -- and especially Lebanon -- as governments grapple with wide-ranging social and economic issues with limited resources.

Nudge, he said, is distinct from the two classical tools for changing behavior that governments use -- incentivizing a particular action through financial rewards, such as subsidies, or penalizing negative behavior through laws and the justice system. The first, he said, isn't sustainable while the second doesn't always work. Instead, nudge sits in the middle.

Maki cited the example of organ donation, where traditional opt-in donor systems that have failed over decades to meet the need of transplant lists. Instead, flipping the system to an opt-out system allows those opposed to organ donation to exercise that right to refuse but automatically includes all those who are broadly in favor but for numerous reasons never registered. "[Its] about making it easier, we always say the difference between countries that are in the high 90th [percentile] for organ donation and those today in the single digit percentage is a nudge."?

The idea of nudge economics has been growing rapidly around the world since it first rose to prominence when academic Richard Thaler published his seminal work on the subject in 2008. Thaler's ideas drew the eye of former British Prime Minister David Cameron and U.S. President Barak Obama while both were in office and late last year, the academic was awarded the Nobel Memorial Prize in Economic Sciences.

Obama and Cameron helped put nudge economics into mainstream policymaking -- in 2011, the Guardian newspaper described the U.K.'s nudge unit as the wackiest and most voguish corner of government -- it has expanded rapidly. Today, Maki says there are between 50 and 60 official units around the world working from the national government level down to individual ministries as well as NGOs, the private sector and activists.

Maki says the foundation of nudge economics rests on the idea that people are not the rational beings that classical economic theory teaches. Instead, overlapping biases, routines, preconceptions and outlooks means that we often procrastinate and delay things we know we should do, such as filing tax returns or starting a diet and exercise routine, or actively pursue activities that are damaging to us or society at large, such as smoking or not following traffic laws.

"We [all] want to be objective, we want to do all those great things but there is what we call an intention-action gap. We want to save for a pension, everybody wants to, we want that start but we don't always follow through and those nudges are basically the tiny things that will help us with that action-intention gap," Maki explained.

Maki helped establish the Middle East's first center for nudge at the Qatar Behavioral Insights Unit in 2016 and then set up Nudge Lebanon in Beirut in February 2017. While he was one of the first pioneer's in the Middle East, he expects that by the end of 2018 there will be centers across the region.

While he says there have been challenges getting the government in Lebanon on board with the idea of a national nudge unit, Maki has already had successful interventions and believes nudge has huge potential in the country.

Nudge Lebanon ran an experiment in south Lebanon's Sidon to try and find ways to encourage more people to pay electricity bills without costly, labor-intensive repeat visits by payment collectors. Working with Electricite du Lebanon, Nudge Lebanon sent out three new bill reminders alongside a control group who received the usual reminder. The first new bill broke down what happens if the bill payer hasn't settled the account on the inspector's second visit with the financial penalty they will face. The second tried to encourage bill payers to come forward by saying it was a matter of national pride and the third played on social norms by telling bill payers that 90 percent of their neighbors had already paid. While the first reminder only saw 4 percent more recipients pay, on the inspector's second visit, 13 percent more responded to the social norm stimulus and 15 percent more to the call for national pride.

Maki says the important element of nudge economics is scientific trials and data. "I'm not going to settle for what the MPs tell me is good or what ministries tell you is good, I want to see [through experimentation.]"

"We are very much obsessed with the transformative power of small behavior change interventions and nudges while admitting our limitations, there are things that cannot be nudged," he said. Indeed, Maki stressed that nudge economics was not a panacea to all the country's issues but in areas such as traffic violations, bill payment or reporting corruption to hotlines, there was big potential.

Thaler's Nobel Prize win has helped throw weight behind the burgeoning ideas of nudge, but locally, Nudge Lebanon recently received one of eight $500,000 grants from Carnegie for social innovation in the Middle East that Maki says has given their work validation. "We're extremely proud, being one of the babies compared to these giants like the American University of Beirut, Lebanese American University or the American University of Cairo. ... Things like this will make us grow and expand," he said.

Maki stressed the importance of continually testing and experimenting with nudge interventions and adapting. Failure he added, can teach as much as a success. "We want to build capacity in pockets of excellence in many ministries, [run] some experiments and hopefully replicate [successes] with some support," he said.

"But if I do something and it brings only a 2 percent [return], is that not a resounding success? When it's cost-effective, when it's something I build on and I move to the next intervention and then build on that ... there's an accumulation."

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Mar 2, 2018
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