Recently
Indian government announced the demonetization of the Rs 500 – Rs 1000 note.
The decision was announced by Indian Prime Minister Mr Narendra Modi through a
special address to nation on 8th Nov 2016. The reason was given by
government is that this decision was taken to curb and destroy black money that
is available with corrupt politicians, bureaucrats and business men and to
destroy terror funding and to eliminate fake currencies exists in country. The
decision was cheered by common people. All social media platforms like whatsapp,
Facebook and twitter were stormed by messages related to demonetization. While
honest people were celebrating, corrupt people who have black money were busy
in hiding their black money. Government announced that people who have hard
earned honest money in form of Rs 500 and Rs 1000 currency can go to bank after
2 days and get it exchanged with new notes.
People of India celebrated it for
two days and reached to bank on 11th Nov to exchange the notes. Huge
queue started to form in front of bank. Lines were so long that all people are
not able to get cash from bank. ATMs all over to country started to dispense
notes from 12th Nov but they were also having long lines. People
started to feel cash crunch. There was no enough cash available in the banks.
Lines in front of bank and ATM started getting longer day by day and few people
were able to get cash and that was too in form of Rs 2000 note which was again
not able to utilize day to day use items like milk, vegetables etc. Despite of
so many problems, common public of India were firmly standing with Prime Minister
Modi and was supporting the decision. Situation started to get tough and media
started to report lot of natural deaths occurred due to people standing in line
and the corrupt people who lost money due to this move started to take benefit
and started to spread the message that this decision was not carried out with
proper planning and government must roll back the decisions. A section of
politicians and media started to provoke the people who were standing in the
line peacefully that due to government decision they are facing too many
difficulties. IT Cell of both parties (Pro demonetization and anti-demonetization)
took gear in hand on social media and social media was full of both types of
messages.
Pro
demonization team is presenting it as masterstroke by government and claiming
that it will yield very fruitful result in future and presenting Prime Minister
Modi as visionary leader who have guts to remove corruption from country on the
other side anti demonetization team that mostly consist opposition political
parties are presenting this decision as backfired decision. They are claiming
that it will not help to curb corruption and it is only creating problems for
common people. They believe that it will harm the current government and they
will face huge damage in coming elections. Lot of articles published at various
Medias for analyzing these issues and everyone presented their own point of
views with facts and figure. In this article I will try to solve the same
issues but with different approach. While most of the writers took economic
models as the reference and presented their views, I will take neuroeconomics
models and Neo Psychology to analyze mindset of common people and try to find
out how they will perceive this decision of demonetization and whether they
will support the government or penalize the government.
In
the democracy, elections are the medium to express people opinion of government
policies. Currently no elections are scheduled in this year. Nearest elections
are scheduled in some states in March 2017 so the question is when people will
go to cast their votes in March 2017 they will be positively influenced by this
government decision or will be negatively influenced or will forget it
completely
To
understand the mindset of people we need to understand a very common term of
psychology that is called Cognitive
Dissonance.
Cognitive
Dissonance simply means mental stress or discomfort due to deviation from
existing situation, idea or belief. We human don’t like cognitive dissonance
and always try to reduce it by avoiding idea or situation or by adopting it.
The decision of demonetization put entire country in cognitive dissonance
because everything was going on in routine was and suddenly that were forced to
stand in bank ques. Though amount of dissonance was different on different people
while media was evaluating entire India on similar value but effect of
dissonance was different on different people. A person who is habitual of
living luxurious life style will feel different dissonance by standing in bank
line than a person who is habitual of hardships of life and here media made the
mistake. They thought that rural people will be hardly effected by it but in different
surveys it was found that despite of lot of hardship faced by rural people
their dissonance was lower than anticipated value but despite of all these it
can’t be denied that people are in cognitive dissonance. Theory of cognitive dissonance is founded
on the assumption that individuals seek consistency between their expectations
and their reality. Because of this, people engage in a process called
"dissonance reduction" to bring their cognition and actions in line
with one another. Psychologist Lion Festinger did lot of experiments and
found out that dissonance may be due to three main reasons:
1.
Forced compliance
behavior – when someone is forced to do publically that they don’t want to do
then dissonance is created between their cognition (I don’t like to do it) and
their behavior (I did it)
2.
Decision making –
decisions always arouse dissonance
3.
Effort – when we
made efforts for something and we didn’t get the result
Dissonance
caused due to demonetization falls under the category of forced compliance behavior
where people were forced to stand in long bank ques. Shopkeepers forced to do
business digitally. Lot of daily wagers lost the job and forced to stay at
home. So how do people react when they put in this situation and how their
perception can be change? To understand this Festinger carried out a very
interesting experiment that gives very interesting outcomes. Festinger and Carlsmith (1959)
investigated if making people perform a dull task would create cognitive
dissonance through forced compliance behavior.
In their laboratory experiment, they used 71
male students as participants to perform a series of dull tasks (such as
turning pegs in a peg board for an hour). They were then paid either $1 or
$20 to tell a waiting participant (a confederate) that the tasks were really
interesting. Almost all of the participants agreed to walk into the waiting
room and persuade the confederate that the boring experiment would be fun. When the participants were asked to evaluate
the experiment, the participants who were paid only $1 rated the tedious task
as more fun and enjoyable than the participants who were paid $20 to lie. Being paid only $1 is not sufficient incentive for lying and so
those who were paid $1 experienced dissonance. They could only overcome that
dissonance by coming to believe that the tasks really were interesting and
enjoyable. Being paid $20 provides a reason for turning pegs and there is
therefore no dissonance. Exactly same happened in India, despite of so much
dissonance people are still trying to support government and it is due to they
can only overcome dissonance by coming to believe that they are doing service
to nation.
If
government wants to reduce the dissonance of citizen than government should widely
create a social propaganda that they are doing it for nation and in future they
will get great results and government was very much successful in creating this
perception. People might have chosen violence and vandalism to remove their
dissonance but till now there is no such news that shows that people opted out
other method to justify their belief and that was they convinced themselves
that they are doing it service to nation and it’s for betterment of country.
Government’s entire focus should be on building
the perception of positive self-esteem by the message of “service to nation” by using all platforms like electronic media
and social media. As people opts this method to reduce their dissonance two
psychological phenomena – choice support
bias and confirmation bias come into play. Choice support bias is human
tendency where we give more weightage to the attributes of option choose by us than
the option rejected by us and confirmation bias is tendency to search,
interpret, share the information in such a way that it supports their existing
belief (I am doing service to nation). These two phenomena will further
reinforce the new attitude of people after demonetization
How attitude will change with the time
To
reduce the dissonance, initially people have opted out the belief that they are
doing service to nation and it will bring better results in future but
government should not take it casually since this behavior can change with the
time. Belief can tackle the dissonance at certain level and if dissonance goes
high then this belief can be changed and government should not forget that they
are not working in ideal situation. There are opposition parties and a section
of media who have been continuously trying to create the perception to present demonetization
as fraud, unplanned and scam that will increase the dissonance level. To
counter it government should work in both fronts.
1.
keep
increasing the tolerance level of people by circulating the message about “service
to nation”
2.
Keep
decreasing the dissonance level by distributing new cash through banks and
ATMs. Open and promote cashless mediums for trading and daily purchases
Though
despite of lot of efforts opposition parties are failed to create impact till
now and the major reason is difference between approach of opposition parties
and government. While government chose “Preaching
approach” opposition parties choose “Fear
approach”. Social psychological research has shown that
fear does not always lead people toward rational behavior. it may instead trigger
denial. Recent theories suggest that being confronted with the fact that you
are not practicing what you (service to nation). Preach induces feelings of
hypocrisy,(Army is serving the nation at border it’s our turn to serve the
nation) which is a form of cognitive
dissonance. Cognitive dissonance has been shown to produce "self-persuasion,"
a powerful and relatively permanent form of persuasion. It is generally
predicted that individuals will bias their attitudes on the experimental task
in a positive direction so as to justify their action and same happened in the
case of demonetization
What next after 31st December
As far
as the game of perception, government has won the first round of demonetization
where they were successful to force people to buy its decision. Second phase of
this move will start from next month since PM asked to give 50 days (till 31st
Dec) after that he promised to give the results. People are expecting that
those people who looted them for 60 years will be caught and huge money will be
recovered that will be used in various soap operas for poor and middle class
people. Now it’s duty of government to give them the experience that was
promised to them. This decision is masterstroke or backfire will entirely depend
upon how government makes them feel after December and the success of entire
mission depends upon it.
Opposition
leader Mr Chidambaram said that people would never forget the pain that they
felt in demonetization and would take the revenge in elections. I think Mr
Chidambaram doesn’t know anything about human psychology. He must read the
Fading Memory Affect and Recency bias. As par fading affect bias our brain
forgets the memories related to pain more quickly than memories associated with
pleasure and as per Recency bias we have tendency to recall last information in
series very easily. So what matters is the final outcome of demonetization.
That will be in the mind of a voter when they will go to cast their vote in
2019. So to make it masterstroke, government must work on following activities –
·
Widespread
IT raids all over the India and news related to IT raids must be spread widely
through all mediums. This type of news gives thrilling stimuli in the brain and
remains in memory for long time.
·
Arrest
of big fishes will reinforce the beliefs of people that move was with honest
intentions. Let people sit in their rooms with cup of tea and take enjoy
watching them going to Jail.
·
Government
must use the black money collected through demonetization for the welfare of
poor, middle class, nation building and army
If
government is successful in managing all this then this demonetization will become
masterstroke for government otherwise it will backfire and negatively affect
the government.