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Art of tax return filing, nudging and budging!



"Putting fruit at the eye level" is a Nudge. Nudge proposes positive reinforcements  to influence the behaviour and decision making at individual level and at a societal level.

Richard Thaler  and Cass Sunstein in their book Nudge: Improving Decisions About Health, Wealth, and Happiness have written on Nudges as the key method for influencing the human behaviour which has huge ramifications for the economic and political spheres of every country. Thaler won Nobel Prize for this path-breaking behavioural economics concept. The theory itself was built on the heuristic human behaviour concept of Daniel Kahnemann-Tversky model.Daniel Kahnemann in his book Thinking: Fast and Slow mentions System 1 and System 2 of human thinking process in which System 1 is quick, fast, hunch-based,heuristic and System 2 based on some primitive level analysis to arrive at prefered choice or option. When people have to contend with many choices/constraints or facing time constraint, System 1 will override System 2. leading to a sub-optimal outcome.

 WYSIATI(what you see is all there is) is an important underpinning guide in most of the human decisions made and Daniel Kahnemann has extensively dealt with this in his book. Nudges as a persuasive concept as opposed to any directive,coercive action is an adult to adult interactive mode (Transactional analysis?).

 Some very interesting Nudges that are used all over the worldlink.  Traffic signal lottery, Piano stairs and cigarette butt voting dust bins will be all inducing good behaviour changing habits.

 In the realm of Macro economics inorder to improve tax return filing compliance, some Govts. introduced free health insurance with tax filing compliance.

 However the question of ethics of Nudging or is it some sort of psychological manipulation  of human behaviour , remains open for discussion at the global level.

 India has always talked about Sama, Dhana, Bheda and Dhanda for influencing human behaviours, always starting with Sama/Dhana. Is the concept of Dhana not the same as "Putting a fruit at the eye level"- a Nudge?!!

 Closely connected with it is the Art of Choosing written by Sheena Iyengar in marketing parlance. She found out with jam flavour experimentation that too many choices confuse people in decision making . She demonstrated that people who tasted limited no. of jam flavours are ten times more likely to buy jams than those given more flavours to taste.But she is of the view that neither more choices nor very little are good ,but optimum lies somewhere in between.

 Daniel Kahnemann's System 1 will always take over human decision making when confronted with too many choices/options and this has been clearly brought out by Sheena's experiment. The same will hold good for Nudges also. Therefore some of the marketers have started offering a simple default option which will be a win-win for both the seller and the buyer. But  lot of ground work to be done to decide on this default option for the buyer to  perceive it that way!!

 As Sheena Iyengar says humans are born to create meaning and also to choose, science can help us to become skillful choosers ,but ultimate decision for zeroing in on a choice is still an art. 

  Tax return filings is still an art?!We wudn't  budge with Nudges?!!
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