Pakistan Institute of Development Economics

PDR

THE PAKISTAN DEVELOPMENT REVIEW 

New Frontiers in Behavioural Science: Scarcity, Nudge, Sludge and Social Norms (M.L Qureshi Memorial Lecture: Key Takeaways)

Sludge—excessive time consumed in performing a task—imposes a burden on society. Administrative burdens, reporting requirements, paperwork requirements, waiting time, in-person appearances, and much more operate as a kind of an essential between human beings and something that connects their life. Sludge imposes time-tax (opportunity cost), monetary cost, and psychological costs upon society. There should be a sludge audit to quantify the magnitude of such costs—knowledge of the sludge magnitude would provide the basis for the efforts aimed at sludge-reduction

One of the many ways to reduce sludge would be to nudge people into doing something. Nudges, however, are a function of human behaviour, therefore, it is important to understand human behaviour regarding what motivates a person to do something or refrain from another. Human beings suffer from cognitive scarcity, and they have a limited processing capacity in their mind. If we are sick, elderly, or suffering from incapacity, the cognitive ability will be reduced further. We have spent a great deal of time debating economic scarcity over the last hundred years. Now, we need to spend a great deal of time in the next hundred years debating cognitive scarcity.

Cass Sunstein

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