Middle East looks to Nudge Theory amid economic strain

Confronted by a regional economic downturn and mounting demands on public services, the countries of the Middle East are struggling to cope with an increasing strain on their financial resources. Now, governments across the region are turning to the prospects of Nudge Theory to help offset their pressing budgetary and societal challenges.  

Nudge Theory initially developed from the field of Behavioral Economics, which leverages the scientific methods of psychology to affect human decision making. Its appeal as a tool of governance lies in its cost-effective and unconventional approach to policy implementation that "nudges" people towards desired choices.

"If we're trying to influence peoples' behaviour, we typically have two policy levers," said Behavioral Economist Fadi Makki. "[In government] we tell someone, 'if you don't do this you will be punished.' This is what we call a command-and-control and enforcement approach; and the other one is, 'if you do this, I will reward you.' The first one doesn't always work… and the second one is not sustainable."

To fill the gaps between these policy shortcomings, Makki has managed the Behavioral Insights Unit (BIU) in Qatar since its inauguration in August 2016 in applying Behavioral Economics within the country.

The BIU, which is the first Nudge institution in the Middle East, was created to work toward the goals associated with Qatar's World Cup preparations.

Some letters attempted to peer-pressure consumers by informing them that the majority of their neighbours paid their bills on time. Other versions appealed to the recipient's national pride

Following successes in Qatar, Makki is supporting the set-up of a Nudge initiative in Lebanon. Speaking the launch event in February, he detailed a previous initiative in the city of Saida where Nudge Theory was used to curtail electricity payment delinquency to the state-owned power company.  

Patrons who missed their first payment deadline were issued varying types of follow-up notifications. Some letters attempted to peer-pressure consumers by informing them that the majority of their neighbours paid their bills on time. Other versions appealed to the recipient's national pride, drawing a connection between the financial stability of the electric company and the wealth of the nation.

When compared with a control group these notifications were responsible for improving payments by 13 and 15 percent respectively.

According to Makki, achievements like these are catching the attention of governments around the Middle East.

"Many more Nudge Units are being set up as governmental Nudge Units in the Middle East, so mark my words, within a year every single government within the GCC will have Nudge units.

"There is quite a bit of traction," Makki added. "We know that because [governments] are talking to us and other behavioural insights and nudge units. They're talking to the universities that are known for behavioral insights. They're discussing collaboration as well as capacity building, and sending their officials to get training on behavioral insights and applications, so this is imminent."

Joshua Martin is vice-president of the US-based behavioral science non-profit, Ideas42. His organisation has also been contacted by Middle Eastern countries interested in Nudge Theory. "I think there is a massive amount of interest and opportunity. I mean in the past six months we've been contacted by four or five governments in the Gulf to begin working with them on applying behavioral science in a wide-ranging way."

Martin told The New Arab that Nudge's applications in the region could range from refugee livelihoods - which Ideas42 is currently programming for in Lebanon - to Islamic finance.

"A lot of the Gulf governments that we've heard from so far are particularly interested in these lifestyle issues around obesity and health, and on the other side, youth and labour market issues. How to get different types of youth that may have been marginalised or that had not participated in the labour system involved in the labour market, whether that be women or whether that be other particular social groups."

In Lebanon, Makki says he plans to curb speeding violations using optical illusions that give drivers the impression they're accelerating

One of the countries most interested in Behavioral Economics is the Kingdom of Saudi Arabia. Ahmad al-Zahrani, director-general of the Business Center at Saudi Arabia's Institute of Public Administration, said he was personally interested in Nudge Theory and has been working to promote its use. 

"I cannot speak for the government but I have met with many government officials and they're interested in the behavioral aspect, in the nudge policy, and some government agencies, they're at an early stage in setting up their own nudge unit, so my own guess is, in two or three years, you would see at least two or three Nudge units in the country working on behavioral economy," explained Zahrani. "So, yes, the government is going towards that direction."

Several monarchies in the region, including Dubai and Oman, are embarking on national transformation agendas that could prove to be opportune conduits for the spread of Nudge Theory. Riyadh is also looking to integrate behavioral science into its Vision 2030 initiatives. Zahrani stated: "One of the interesting things is Saudi, now they are formulating what they call [the] National Saving Strategy, and I have met government officials and I'm involved now in that strategy to add more behavioral aspects to it."

Makki hopes that the Arab World's inaugural Behavioral Economics conference, BX Arabia - set to take place at the end of 2017 - will also expand Nudge activities and encourage practitioners to learn from experiments implemented around the world. 

In the meantime, Behavioral Economists continue to design a variety of projects for the Middle East. In Lebanon, Makki says he plans to curb speeding violations using optical illusions that give drivers the impression they're accelerating. Zahrani in Saudi Arabia, meanwhile, is developing an experiment to reduce school absenteeism by publishing students' attendance records.

However, Zahrani cautions that techniques from the west may not be as effective in the Middle East, where cultural factors may change the constants of behavioral science. Time will tell whether Nudge theory can live up to expectations as governments begin to institutionalise the policy approach throughout the region. 

Scott Preston is a multimedia journalist based in Beirut, Lebanon, covering refugees and political topics in the Middle East. Follow him on Twitter: @ScottAPreston