17/11/2015 8:55 AM IST | Updated 15/07/2016 8:25 AM IST

Bihar's Battle Of Incentives: A Lesson In Political Behaviour

Hindustan Times via Getty Images
PATNA, INDIA - OCTOBER 20: BJP hoardings during election campaigns on Chiraiya Bridge on October 20, 2015 in Patna, India. Bihar will hold five-phase elections between October 12 and November 5 to elect the 243-member assembly. Counting of votes will take place on November 8. (Photo by Arvind Yadav/Hindustan Times via Getty Images)

If you followed the Bihar election, you'll realise it was like Game of Thrones, thankfully minus the nudity -- full of drama, action, tragedy, fighting and emotions. If the election was a movie it would have garnered a 100% on Rotten Tomatoes and broken the box office records. It's the Bihar election -- go big or go home.

The reach of this election was not just limited to the people of Bihar but also to monkeys, who paid their respects by visiting the polling both. A few leaders even seemed to have started their own tours and travels business by promoting packages to Pakistan, Bangladesh and other countries.

"Voters are not stupid, they just respond better to incentives. Politicians have cracked this code a long time ago..."

Elections in general are all about buying voters, but when it comes to Bihar, it has to be grand. And why not -- the latest census says the total population of Bihar is 1.7 million! There is an old Hindi song "Ye jo public hai sab jaanti hai". But is this really true? Economists have proved that voters are mostly ignorant, but they've added a caveat and termed it 'rational ignorance'. Voters are not stupid, they just respond better to incentives. Politicians have cracked this code a long time ago, so this is the mechanism they use to lure voters.

The biggest pull during this election was the Janta Parivar, where, instead of dividing votes between minorities and castes, all the big guns came together to form a grand alliance.

Some of the handouts promised by Nitish Kumar were very simple and indeed quite attractive to the masses. These ranged from giving Rs 1000 per month for nine months to all the unemployed youth of Bihar, to issuing student credit cards with a credit limit of Rs 4 lakh, to a free electricity connection for every household. Since alcohol consumption is a problem in Bihar, he also promised to put a prohibition on liquor (music to the ears of women in the state, though we all know how well banning things works in India). The list went on, with something for every Bihari and Bahari.

To counter this, our "Vikas Man", Prime Minister Modi launched into the scene and hit some sixes and fours on the pitch! He further promoted the idea of Digital India, providing free internet services in every village and hence connecting them with semi-urban or urban areas. With a healthy village, the party also promised in its vision document, Atal Medicine Centres which would provide medicine at a discount. Further, they promised plots for the landless. And of course, since women needed wooing too, Modi took Nitish Kumar's idea of a cycle one step further and promised 5000 scooters to girls to go to high school. After this, of course there was a need to take care of Dalits and Mahadalits, so colour television sets for them! The BJP also promised to distribute 50,000 laptops to meritorious Class 12 students who "perform better" in exams. One can always ask how these things will help us walk on "Vikas Marg" but these questions are usually put forth by people who did not get the benefits, and are simply disgruntled now. Who follows logic anyway in politics?!

"One can always ask how these [incentives] will help us walk on 'Vikas Marg' but these questions are usually put forth by people who did not get the benefits, and are simply disgruntled now."

Nobody cares how much the state and the Centre have to invest if either of the parties wins the elections. Whether they increase taxes or print more money or seek out more foreign investments, there are problems associated with each - it's not as easy as making promises (but again, let's leave logic out of this!).

But as we all know you cannot win an election by just dangling a carrot. For those who were not receiving any of the above benefits, politicians made a play on emotions with words like secularism and nationalism, and the sacrifices they have made for their state and nation.

We must realise one thing: human beings act on incentives. Each individual has their own priorities and they act accordingly. Politicians don't become saints or do-gooders when they join politics. Their incentive is to win elections. Even if there is a bad policy in place, there is a likelihood of it getting passed in the Parliament if it is closely tied with emotions and vote banks.

This election already proved that you need to connect and sell emotions as well as handouts and goodies. This doesn't make voters irrational or stupid. It simply means that they've cracked the code and are focusing on short-term, tangible demands. They know that the nature of politics is such that no one cares about the long run anyway.

Milton Friedman once noted:

"I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or if they try, they will shortly be out of office."

The Public Choice Theory refers to "the use of economic tools to deal with traditional problems of political science." Its content includes the study of political behaviour. Watching the Great Indian Drama live from Bihar was an excellent lesson in public choice.

Congratulations Grand Alliance for figuring out the correct set of incentives!

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