Thursday, October 3, 2013

The framing problem with welfare programs

It is commonplace for political leaders to claim that they have increased the number of beneficiaries of Old Age Pensions (OAP) or Public Distribution System (PDS) or the National Rural Employment Guarantee Scheme (NREGS) by a certain percentage every year. In fact, the irony cannot be missed that even as we achieve significant reductions in our poverty level (while the magnitude of decline is debatable, it cannot be denied that poverty has declined, and that too significantly), the coverage of our poverty support programs have been expanding at an even faster pace.

The performance of the state Rural Development and Civil Supplies departments and its officials are judged by the magnitude of increase in the coverage of OAP or PDS or NREGS beneficiaries. Chief Ministers proudly highlight this achievement in their annual Independence Day speeches. Ministers lose no opportunity to declare them in every meeting and press conference. “Exemplary work” in these areas, recognized in the form of awards given to officials, are generally defined in terms of innovations to expand coverage. “Coverage expansion” has become the thousand pound gorilla in the room with many of our redistributive programs.  

It has distorted incentives and priorities in atleast two significant ways. One, its quantitative simplicity and ease of monitoring has edged out every other parameter, including those related to the quality of coverage or the achievement of the desired program outcomes. Therefore, inclusion and exclusion deficiencies in the coverage of these program, quality of food grains delivered, pilferage in the pension delivery chain, productivity improvements achieved by the wage guarantee program, and so on become incidental to coverage expansion.

Second, as aforementioned, this definition of program success has cognitively suppressed the logical fact that their successful implementation should translate to reduction in coverage. Consider the case of NREGS. In many state, atleast many districts, even after a very high level of coverage has been established and even local wages have risen sharply, District Collectors continue to be evaluated based on their coverage metric. We overlook that the NREGS is an unemployment insurance program and its success carries the seeds of its irrelevance.

Behavioral psychologists would define this a framing problem. Our cognitive understanding of the program has become entrenched in terms of coverage expansion, so much so that everything else has been relegated to the background. A cognitive bias arising out of a framing problem can be overcome only by breaking out of the framework and redefining it.

In the circumstances, we need to reframe the discussion and start debating such programs in terms of its objectives. More specifically, the programs should be judged on their specific and clearly defined objectives. This evaluation narrative should naturally include a measure of people exiting the program, having successfully, temporarily or permanently, graduated out of the deprivation that the program sought to address.  

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