UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

B.A., LL.B. (HONS.)

SEMESTER I

ACADEMIC YEAR: 2019-20 SESSION: AUG-DEC, 2019

ASSIGNMENT
FOR
POLITICAL SCIENCE
(CLNL 1003)

TOPIC: “While exploring the viability of the concept of Randomised Control Trials and Nudge
Theory, elaborate the idea of Justice”

Under the Supervision of: Vikas Chaubey

NAME: JUHI MATHUR

SAP NO: 500076850
ROLL NO: R450219046
The 2019 Nobel Prize in Economic Sciences was awarded to three economists on Monday for
their pioneering research into the use of experimental approaches to fight global poverty. The
trio, based in the United States, includes Abhijit Banerjee and Esther Duflo, who currently
work at the Massachusetts Institute of Technology, and Michael Kremer of Harvard
University.

The Prize committee noted that these economists "introduced a new approach to obtaining
reliable answers about the best ways to fight global poverty." The new Nobel laureates are
considered to be instrumental in using randomised controlled trials to test the effectiveness of
various policy interventions to alleviate poverty.

What is a randomised controlled trial?

A randomised controlled trial is an experiment that is designed to isolate the influence that a
certain intervention or variable has on an outcome or event. A social science researcher who
wants to find the effect that employing more teachers in schools has on children’s learning
outcomes, for instance, can conduct a randomised controlled trial to find the answer.

The use of randomised controlled trials as a research tool was largely limited to fields such as
biomedical sciences where the effectiveness of various drugs was gauged using this
technique. Mr. Banerjee, Ms. Duflo and Mr. Kremer, however, applied RCT to the field of
economics beginning in the 1990s. Mr. Kremer first used the technique to study the impact
that free meals and books had on learning in Kenyan schools. Mr. Banerjee and Ms. Duflo
later conducted similar experiments in India and further popularised RCTs through their book
Poor Economics, published in 2011.　　

Why is randomised controlled trial so popular?

At any point in time, there are multiple factors that work in tandem to influence various
social events. RCTs allow economists and other social science researchers to isolate the
individual impact that a certain factor alone has on the overall event. For instance, to measure
the impact that hiring more teachers can have on children’s learning, researchers must control
for the effect that other factors such as intelligence, nutrition, climate, economic and social
status etc., which may also influence learning outcomes to various degrees, have on the final
event.
Randomised controlled trials promise to overcome this problem through the use of randomly
picked samples. Supporters of RCTs believe that since all random samples are subject to the
same array of "confounding" factors, they are essentially identical to one another. Using these
random samples, they believe, researchers can then conduct experiments by carefully varying
appropriate variables to find out the impact of these individual variables on the final event.

A researcher, for instance, may supply one random set of schools with more teachers while
other schools are left alone. This will allow him to gauge the effect of hiring more teachers on
learning. Many development economists believe that RCTs can help

governments to find, in a thoroughly scientific way, the most potent policy measures that
could help end poverty rapidly.　

What are some criticisms of randomised controlled trials?

A popular critic of randomised controlled trials is economist Angus Deaton, who won the
economics Nobel Prize in 2015. Mr. Deaton has contended in his works, including a paper
titled "Understanding and misunderstanding randomised control trials" that simply choosing
samples for an RCT experiment in a random manner does not really make these samples
identical in their many characteristics.

While two randomly chosen samples might turn out to be similar in some cases, he argued,
there are greater chances that most samples are not really similar to each other. Other
economists have also contended that randomised controlled trials are more suited for research
in the physical sciences where it may be easier to carry out controlled experiments. They
argue that social science research, including research in the field of development economics,
may be inherently unsuited for such controlled research since it may be humanly impossible
to control for multiple factors that may influence social events.

Nudge is a concept in behavioural science, political theory and behavioural economics which

proposes positive reinforcement and indirect suggestions as ways to influence the behaviour
and decision making of groups or individuals. Nudging contrasts with other ways to achieve
compliance, such as education, legislation or enforcement.

The nudge concept was popularized in the 2008 book Nudge: Improving Decisions About
Health, Wealth, and Happiness, by two American scholars at the University of Chicago:
economist Richard Thaler and legal scholar Cass Sunstein. It has influenced British and
American politicians. Several nudge units exist around the world at the national level (UK,
Germany, Japan and others) as well as at the international level (e.g. World Bank, UN, and
the European Commission). It is disputed whether "nudge theory" is a recent novel
development in behavioural science or merely a new term for one of many methods for
influencing behaviour, investigated in the science of behaviour analysis.

A nudge makes it more likely that an individual will make a particular choice, or behave in a
particular way, by altering the environment so that automatic cognitive processes are
triggered to favour the desired outcome.

An individual’s behaviour is not always in alignment with their intentions (termed a value-
action gap). It is common knowledge that humans are not fully rational beings; that is, people
will often do something that is not in their own self-interest, even when they are aware that
their actions are not in their best interest. As an example, when hungry, people who diet often
under-estimate their ability to lose weight, and their intentions to eat healthy can be
temporarily weakened until they are satiated.

Nobel Laureate Daniel Kahneman  describes two distinct systems for processing information
as to why people sometimes act against their own self-interest: System 1 is fast, automatic,
and highly susceptible to environmental influences; System 2 processing is slow, reflective,
and takes into account explicit goals and intentions. When situations are overly complex or
overwhelming for an individual’s cognitive capacity, or when an individual is faced with
time-constraints or other pressures, System 1 processing takes over decision-making. System
1 processing relies on various judgmental heuristics to make decisions, resulting in faster
decisions. Unfortunately, this can also lead to sub-optimal decisions. In fact, Thaler and
Sunstein trace maladaptive behaviour to situations in which System 1 processing over-rides
an individual’s explicit values and goals. It is well documented that habitual behaviour is
resistant to change without a disruption to the environmental cues that trigger that behaviour.

Nudging techniques aim to use judgmental heuristics to our advantage. In other words, a
nudge alters the environment so that when heuristic, or System 1, decision-making is used,
the resulting choice will be the most positive or desired outcome. [14] An example of such a
nudge is switching the placement of junk food in a store, so that fruit and other healthy
options are located next to the cash register, while junk food is relocated to another part of the
store.

Types of nudges
Nudges are small changes in environment that are easy and inexpensive to
implement. Several different techniques exist for nudging, including defaults, social proof
heuristics, and increasing the salience of the desired option.

A default option is the option an individual automatically receives if he or she does nothing.
People are more likely to choose a particular option if it is the default option. For example,
Pichert & Katsikopoulos found that a greater number of consumers chose the renewable
energy option for electricity when it was offered as the default option.

A social proof heuristic refers to the tendency for individuals to look at the behaviour of other
people to help guide their own behaviour. Studies have found some success in using social
proof heuristics to nudge individuals to make healthier food choices.

When an individual’s attention is drawn towards a particular option, that option will become
more salient to the individual, and he or she will be more likely to choose to that option. As
an example, in snack shops at train stations in the Netherlands, consumers purchased more
fruit and healthy snack options when they were relocated next to the cash register. Since then,
other similar studies have been made regarding the placement of healthier food options close
to the checkout counter and the effect on the consuming behaviour of the customers and this
is now considered an effective and well-accepted nudge.

Application of theory

In 2008, the United States appointed Sunstein, who helped develop the theory, as
administrator of the Office of Information and Regulatory Affairs.

Notable applications of nudge theory include the formation of the British Behavioural

Insights Team in 2010. It is often called the "Nudge Unit", at the British Cabinet Office,
headed by David Halpern.

Both Prime Minister David Cameron and President Barack Obama sought to employ nudge

theory to advance domestic policy goals during their terms.

In Australia, the government of New South Wales established a Behavioural Insights

community of practice.

Nudge theory has also been applied to business management and corporate culture, such as in
relation to health, safety and environment (HSE) and human resources. Regarding its
application to HSE, one of the primary goals of nudge is to achieve a "zero accident culture".
Leading Silicon Valley companies are forerunners in applying nudge theory in corporate
setting. These companies are using nudges in various forms to increase productivity and
happiness of employees. Recently, further companies are gaining interest in using what is
called "nudge management" to improve the productivity of their white-collar workers.

Behavioural insights and nudges are currently used in many countries around the world.

Lately, the nudge theory has also been used in different ways to make health care
professionals make more deliberate decisions in numerous areas. For example, nudging has
been used as a way to improve hand hygiene among health care workers to decrease the
number of healthcare associated infections. It has also been used as a way to make fluid
administration a more thought-out decision in intensive care units, with the intention of
reducing well known complications of fluid overload.

Critique

Nudging has also been criticised. Tammy Boyce, from public health foundation The King's
Fund, has said: "We need to move away from short-term, politically motivated initiatives
such as the 'nudging people' idea, which are not based on any good evidence and don't help
people make long-term behaviour changes."

Cass Sunstein has responded to critiques at length in his The Ethics of Influence making the
case in favour of nudging against charges that nudges diminish autonomy, threaten dignity,
violate liberties, or reduce welfare. He further defended nudge theory in his Why Nudge?:
The Politics of Libertarian Paternalism by arguing that choice architecture is inevitable and
that some form of paternalism cannot be avoided. Ethicists have debated nudge theory
rigorously.[33] These charges have been made by various participants in the debate from
Bovens to Goodwin. Wilkinson for example charges nudges for being manipulative, while
others such as Yeung question their scientific credibility.

Public opinion on the ethicality of nudges has also been shown to be susceptible to “partisan
nudge bias”. Research from David Tannenbaum, Craig R. Fox, and Todd Rogers (2017)
found that adults and policymakers in the United States found behavioural policies to be more
ethical when they aligned with their own political leanings. Conversely, people found these
same mechanisms to be more unethical when they differed from their politics.
 The researchers also found that nudges are not inherently partisan: when evaluating
behavioural policies absent of political cues, people across the political spectrum were alike
in their assessments.

Some, such as Hausman & Welch have inquired whether nudging should be permissible on
grounds of (distributive) justice; Lepenies & Malecka  have questioned whether nudges are
compatible with the rule of law. Similarly, legal scholars have discussed the role of nudges
and the law.

Behavioural economists such as Bob Sugden have pointed out that the underlying normative
benchmark of nudging is still homo economicus, despite the proponents' claim to the
contrary.

It has been remarked that nudging is also a euphemism for psychological manipulation as

practiced in social engineering.

There exists an anticipation and, simultaneously, implicit criticism of the nudge theory in
works of Hungarian social psychologists who emphasize the active participation in the nudge
of its target (Ferenc Merei, Laszlo Garai).

In their book Neoliberalism the authors argue that while there is much value and diversity in
behavioural approaches to government there are significant ethical issues, including the
danger of the neurological sciences being co-opted to the needs of neo-liberal economics.