AAYLF delegate from Australia Clancy O’Donnell explores centralised behavioural economics within the ASEAN region.
The Association of South East Asian Nations (ASEAN) is a globally successful multilateral institution, capable of fostering consensus between member states to tackle wicked problems across the Indo-Pacific region. But with ongoing fiscal pressure and a range of strategic issues vying for attention, the Secretariat could consider new approaches to ensure progress in the fight against poverty, climate change and other regional collective action problems.
If ASEAN member states are going to meet and exceed their commitments made under the ASEAN Community Vision 2025 and United Nations Sustainable Development Goals by 2030, they must work together, including with partners like Australia, to promote leading policy solutions. Behavioural and experimental economics uses evidence-based, low-cost interventions to address a range of complex and consequential policy challenges. 2020 presents a window of opportunity to make a modest investment in a centralised, behavioural economics unit in South East Asia to deliver measurable benefits for people across ASEAN.
Doing more with less
The ASEAN Secretariat and working groups have a near full dance card, with hundreds of projects and meetings delivered each year with a range of partners from across the world. Coordinating these initiatives between 10 member states takes significant resources. And with a limited annual budget of only around US$20 million and few signs that its mandate or resources will increase, the Secretariat should consider new cost effective ways to achieve its goals.
One approach is through behavioural and experimental economics – 2019 marks the mainstreaming of this field after this years’ Nobel Prize went to Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty.” Their research showed that the ideas of behavioural economics – present bias, impatience, salience, framing effects, for example, can make significant inroads in addressing a range of policy areas. This team used randomised control trials, or RCTs, to boost fertilizer use by Kenyan farmers, improve access to drinking water, drastically improve immunization of children against life-threatening diseases in India and holt the rapid spread of HIV in Nigeria.
Over the last 10 years, Governments around the world have seen the value in adopting these approaches to improve outcomes for citizens in a range of policy domains. Its time we think seriously about deploying a behavioural economics model that suits the ASEAN way. The approach is inherently colaborative and does not involve forcing measures on any ASEAN member. From boosting tax revenue, increasing retirement savings, fighting anti-microbial resistance or countering cyber security threats – there are few areas within ASEAN’s charter that would not benefit from applying behavioural economics.
The right model for ASEAN
One successful model, is to establish a centralised behavioural economics team or a ‘nudge unit’. This would rely on building partnerships and establishing best practice across ASEAN member states. Australia has some lessons it could share, and use its experience to open up a new field of collaboration with ASEAN. Next year, the successor to the ASEAN Framework Action Plan on Rural Development and Poverty Eradication for 2021-2025, could provide a mechanism to establish a new nudge unit to drive reform across ASEAN in a range of strategic priorities.
Ultimately, a behavioural economics team should be centrally located, with clear accountability to Secretariat. The unit should have a mandated return on investment of at-least ten to one. This ambitious rate of return is entirely achievable based on the experiences of other behavioural economics units including Behavioural Insights Team in the United Kingdom. To achieve this, interventions must be scalable, capable of being rolled out in any ASEAN country and where possible, leverage partnerships including through digital platforms. A small nudge could lead to long-term rewards for all ASEAN member states.
*** Author’s views are his own ***