BETA Podcast: Interview with Professor Anuj K. Shah

Elaine Ung: Hello, and welcome to another episode in BETA's podcast series. BETA is the Behavioural Economics Team of the Australian Government, and the team sits in the Federal Department of the Prime Minister and Cabinet. BETA's mission is to advance the wellbeing of Australians by applying behavioural insights to public policy and administration. Hi, my name's Elaine and I'm part of the team. In this podcast series, we interview a whole range of behavioural economics and behavioural insights academics, practitioners and policymakers. This episode is actually part of our mini BX series, where we interviewed some of the speakers at the 2018 Behavioural Exchange Conference, or BX2018. There, speakers travelled from all around the world to share the work they've been doing in the behavioural economics and insights field.

In this episode, I interview Associate Professor Anuj K. Shah, from the University of Chicago Booth School of Business. His research uses psychology and behavioural science to examine social issues such as poverty, youth violence, and crime. And he's particularly focused on understanding human behaviour when faced with scarce resources. It's all very engaging. Hope you enjoy.

Elaine Ung: I have with me, Professor Anuj Shah and he has just come from the session on crime and violence. Welcome, thank you so much for your time this afternoon. Could you please give us a bit of background, who you are and where you've come from?

Anuj Shah: Sure. I'm a cognitive psychologist by training, which means I try to understand how various situational or environmental factors affect how people make decisions, what they pay attention to, and so forth. And for the past seven or eight years, I've been trying to use that as a lens into understanding various social problems like poverty or crime, and violence as well.

Elaine Ung: Great. So you've mentioned that you're a cognitive psychologist by background. How did you become interested in the behavioural science or behavioural economics field and the applied side?

Anuj Shah: So I did a post-doc with Sendhil Mullainathan, who's a behavioural economist, and Eldar Shafir, who is a psychologist who spends a lot of time thinking about things in the world. And over those few years that I had a chance to work with them, I just found the work to be far more rewarding because you know that—you spend a lot of time being wrong, but you know that when you finally get it right that you're going to have something important to say about the world and that's a strong motivator when you're doing this kind of work.

Elaine Ung: Absolutely. Could you share with us some of the things you're working on right now?

Anuj Shah: Sure. In some of the more recent work, we've been trying to use behavioural science and cognitive and social psychology to add additional leverage into how we think about criminal justice policy. So, for example, one widespread problem in the US is that many people don't show up for court. So across the US, about 20% of people miss their court dates. That's even more for low-level offenses. So we've done some interventions where we try to help people pay more attention to information about their court date. We remind them about their court dates. So that's a case where a nudge that you know from other domains and you see that it works in the criminal justice space as well.

We've also done some more involved interventions that aren't necessarily nudges per se, but still draw on the behavioural science literature. We've done some interventions that try to get youth to slow down and reconsider the situations that they're in as a way to reduce violence when they experience social conflict. So that is a more involved intervention, but it's still based on the same insight that people often make decisions too quickly, and how can we get them to slow down?

Elaine Ung: Great. I know you've spoken at a few sessions at BX2018. Could you share some of the things that you did talk about for those who weren't able to make it?

Anuj Shah: Sure. This morning, I was part of the session on financial decision-making. There, I talked about how, when people experience financial hardship, that creates not just financial constraints but also constraints with respect to mental bandwidth, or cognitive capacity. So when we lack money, the room for error goes down and you have to focus a lot more on how you manage that limited budget. That focus sometimes manifests in positive ways, where people spend their dollars more efficiently, they get good at thinking about trade-offs, they're less susceptible to certain pricing tricks. But that focus is also very draining and, as it taxes mental bandwidth, you are going to see some mistakes become more common. People might not pay enough attention to the interest rate; they might borrow too much.

The point I tried to make this morning is that those mistakes aren’t evidence that people are myopic or evidence that they're disengaged from their financial lives, it's evidence that their focus has gone elsewhere. You need to be sensitive to where their attention goes.

Elaine Ung: And what about the session this afternoon?

Anuj Shah: So the session this afternoon, I tried to make the following point. Which is that in the criminal justice space, there's still this strong belief that people choose to commit crimes, that they do a cost-benefit analysis and decide, "This is the action I want to take." But, in fact, a lot of times those moments of choice don't really occur so obviously. They're not such explicit moments of choice. People take an action that they feel is necessary and it happens to be wrong or illegal. And so, as behavioural scientists, one thing that we can try to do is make those moments of choice a bit more explicit. So how do we that? We can shift people's attention to alternative actions that they might not have considered. So that's what the reminders project tries to do, to remind people they have a court date so that they can remember and pay attention to, "Oh, I need to show up to court."

The project that I mentioned on getting youth to slow down their decision-making, that's another version of creating a moment of choice. To say, "Well, you might make an assumption that suggests violence is the only answer here, but if you just step back and think about a different perspective that you could take on the situation, maybe another option would present itself." So that's another way of trying to create a moment of choice, there.

Elaine Ung: Absolutely. What I've really enjoyed at BX so far is actually seeing a lot of the research being used in a very applicable way, not just to solve policies, but also to address social impact and actually contribute to a lot of the broader field in that sense. And I ask this to everyone, do you have a favourite behavioural economics concept or behavioural bias?

Anuj Shah: I don't know if I have a favourite behavioural bias but I think there's one bias that gets talked about a lot, which is a present bias: focusing on the now. I find that to be one of the more fascinating ones because there's actually, that's a description of what happens, that's not a description of why it happens. There's a lot we can do to try to understand why somebody's focused so much on the now. Is it because they're not valuing the future or is it because there's something in the present that is just more important to them?

So for example, here's one reason why I'm interested in it from the context of trying to understand financial hardship. So Jon Jachimowicz, a student at Columbia, has done some work where he says, "Why do poor individuals often discount the future so steeply?" He says, well, one reason could be that just right now, things are more pressing in the immediate moment. But he says another reason is that in order to be willing to wait for, say, more money in the future, not only do you have to value it, but you also have to believe it's going to be delivered. You have to trust the person who says that we're going to deliver this money to you in the future. So what appears to be present-bias is actually just the lack of trust that somebody is actually going to keep their word. And I think that's kind of interesting because we often talk about it as myopia, but it's just that people are considering some other factor entirely.

Elaine Ung: Definitely. And I think what I also see is that it's actually a very complex area, where we might look at a certain bias but in actual fact, there are lots of interplays going on.

Do you BE yourself? So do you apply any of the concepts that you study and research to your everyday life?

Anuj Shah: Well, I can say that the project that has had the biggest effect on me is this project that we did with youth in Chicago where we get them to pause and try and think about other assumptions they can make about a situation instead. A lot of the people on the research team—and this is a project that took many, many people to complete—we say that we ‘CBT’ ourselves a lot now. Because the program is exclusively based on principles of cognitive behavioural therapy. So whenever we catch ourselves making an assumption, often an assumption that somebody means us harm or whatever, we CBT ourselves and try to assume positive intent or see the situation from a different perspective. So, that has definitely influenced how I live with my life.

Elaine Ung: It's an interesting phenomenon, and perhaps one that we can look into in the future as well.

What are your reflections on the evolution of behavioural economics and behavioural insights as a field and where do you see it heading?

Anuj Shah: So I think right now we're at a stage where we're starting to see that we've gotten very good at understanding which situations make themselves available to using the sort of canonical five or six or ten behavioural principles that we know how to use: reminders, plan-making, things like that. And now it's exciting that people are realising, "Okay, what else is there?" And the "what else is there?" question can lead us to look for other psychologies that are going to be relevant. But as I was mentioning earlier, that second-generation nudges session yesterday was also thinking about, well, what are the other points in the policymaking process where we need to be more behavioural as well? So it's kind of interesting to think about both of those trends.

Elaine Ung: One final question, what's the next big project for you?

Anuj Shah: I think the next big project for us is to try and think about what are some other areas where these CBT-like interventions are going to valuable. There's conflict in lots of dimensions across various communities in the US and are there places where this could be useful there?

Elaine Ung: Great. It's a really exciting time to be in the behavioural insights and behavioural economics field. I think it's only growing and I think it's going to be applied a lot more broadly across many, many policy areas. So I look forward to seeing a lot of your work come out. Thank you so much for your time this afternoon.

Anuj Shah: Thanks for chatting with me.

Elaine Ung: Hi, again. Thanks for listening. If you want to learn more about Professor Shah's research, you can find more information on his website at the University of Chicago. Once again, I'm Elaine and you've been listening to a BETA podcast. You can hear our previous episodes at www.pmc.gov.au/beta. Until next time!