To start with a few familiar stories all of us are familiar with. Someone who has invested in shares that have consistently shown a southward trend. What e should do? Logic would demand that he disposes of those shares at the prevailing price to minimize his losses. But more often than not he would buy more shares of the same stock to pair his losses. Another example is of someone who has a rickety old car that requires continuous maintenance. He can junk the car to buy a new one but instead, he goes on spending money on repairs and continues to struggle with the car. A third example would be an organisation that has accumulated losses and a bloated organisational structure that has become top-heavy. Common sense would demand a ruthless cost-cutting exercise and rationalization of its top-heavy structure. Instead, the company spends more time hiring one of the big 4 ( or 5 or 6) consultants who after a hefty fee give a beautifully bound largely cut-and-paste volume that is never acted upon as the overall consensus is not to disturb the existing status quo as significant investment has gone into its operations. Now let us move to agriculture and look at the farmer’s behaviour pattern. A study in India of farmer behaviour was equally intriguing. Usually, farmers plant crops depending on the topographical conditions, the likely income from that crop and the weather patterns of that region. In the Southern states of India, large coconut farms were observed. Most of the farms had dried coconut trees. In a particular geography, few farmers had grown some other crops. In the same region, the groundwater table was depleting which was common knowledge. Still, farmers continued to grow coconut trees. Not only this they also borrowed loans from banks to dig borewells despite the fact that in almost all the cases no water source could be located. The farmers could have easily shifted to some other crops which required less water and less investment. Yet the pattern of repeating behaviour that resulted in failure was observed. It was as if the farmers were chasing failure than success with a vengeance. Classic negative Self-Fulfilling prophecy (SFP).
These different examples force us to conclude that whether one is a learned corporate executive or an illiterate farmer our decisions are largely irrational and ignore facts that are staring at us without any ambiguity. But let me not focus on our learned corporate executive but dwell on the farmer in this note. In all the above examples we notice what in Behavior Economics parlance is known as the Sunk Cost Fallacy (SCF). Simply put SCF implies that individuals are more likely to repeat a behaviour pattern in which they perceive (though irrationally) to have invested resources (time, money or effort). This is a bias resulting from an ongoing commitment. This is a judgement-driven process that instinctively and intuitively follows a status quo approach. Farmers largely follow the age-old practices of their forefathers and ignore scientific advice as their emotional investment has gone into adopting the same methods even though the losses are staring at them. Also adopting a new way of farming or method forces them, again intuitively, to think of what the losses may be than what they stand to gain. This becomes a major concern for all input companies who struggle to educate the farming community on adopting new ways of handling pesticides and other chemicals. All the safe handling instruction booklets are never read or adhered to. It looks as if farmers' entire psychological makeup is of ‘loss aversion’ that any ‘future gain’.
As stated earlier this is an intuitive and subconscious process that can only be addressed through subtle nudging by using effective emotional nudges. It is here in this context that the tools developed by EcoDev (our company) on predictive analysis come in handy. Employing behavioural nudge brings scientific rigour to behaviour modification. Predictive analysis coupled with proper emotional nudge through mobile push strategy works wonders in changing the farmer's behaviour. It is manipulation which is a dirty word. But at the end of the day that is the need to increase productivity, reduce post-harvest loss and adoption of safe chemical handling in the field. Our research has indicated that the farmers suffer from the following factors:
- Simple inertia
- Procrastination
- Fear of the unknown (regret aversion)
- Information overload
A carefully structured nudge program involving the farmer, his immediate family and main influencers through mobile-based push technology is the only way to bring about a lasting change in the behaviour pattern. As the root cause is psychological the solution also needs to bring in those elements that trigger and stimulate the psychological sensitivity of the farmer.
