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Consider, as a thought experiment, a law is imposed which establishes jumping a red signal as a criminal offence – with the offender being asked to pay the required penalty. It is not hard to notice a multitude of individuals following such regulations at any day of the year, especially in metropolitan cities like Mumbai or Delhi. However, this changes as the city rests at night. During late hours, the proportion of travellers who violate traffic rules witnesses a stark rise. In fact, it is not an exaggeration to claim that individuals’ willingness to follow traffic signals decreases at night as compared to the day. However, this contrasts with the intuitive assumption that since there are CCTV cameras placed at most places in cities like Mumbai, the probability of facing the consequences of traffic violations during the night are fairly similar to that in the day. Despite this, why do fewer people follow regulations at night? Moreover, how can we explain the fact that traffic regulations are not adhered to as strictly in smaller cities? After all, if citizens always consider the cost of infringement of a law, can we not expect them to follow them everywhere, all the time?

Questions like these have long been discussed under the purview of an economic understanding of the law and the legal understanding of economics. A school of thought, governed primarily by American Nobel-laureate, Gary Stanley Becker, propagates that human behaviour is rational and utility-maximising. Therefore, any introduction of a law changes payoff calculations for a person and thereby, influences his behaviour. However, this school of thought was challenged by our former Chief Economic Advisor, Kaushik Basu, who argued that the law may appear effective on paper in developing countries but is not so in practice. After all, as the argument goes, a law is nothing but ink on paper – how can it influence our behaviour?

Basu believed that Becker’s perspective, known as his ‘game of life’, has incorrect assumptions, the primary being that it assumes the law to be seriously enforced by authorities. However, in developing countries, it is not merely a game of two players, say businessmen and the government. It should contain at least one additional player – the police, for example. Until and unless the law enforcement body implements the law effectively, it will be unsuccessful in changing an individual’s behaviour. Basu, therefore, through his latest book, Law, Economics and the Republic of Beliefs, introduced the focal point approach to understanding law. In simple words, he explains this approach by stating, “If you expect other people to behave differently, then you may change behaviour.”

Basu’s argument is that a new law does not change one’s payoffs. According to him, multiple equilibria exist in the society, including one in which all the players comply with the rules. The law’s role is to bring their focus to the new equilibrium, so that each player converges to it. In simpler words, a law becomes effective only when it changes one’s expectation of how others behave. Using game theoretical terms, if a player expects others to abide by the law, he may comply as well, making the law effective; if he does not, the law loses effectiveness. Such an equilibrium in the society, known as the Nash equilibrium, is also a sort of ‘self-fulfilling equilibrium’ – a player’s decision to not comply with the law due to the expectation that others will not, further feeds into other’s expectations of the same, who, in turn, continue to behave in the same way. Expectations of non compliance, therefore, feed further infringement. The Swachh Bharat Abhiyan is a good case in point of a successful implementation of the focal point approach to law. It has significantly altered people’s expectation of others’ sense of cleanliness.

Taking the example of traffic lights again, a possible reason for increased disobedience at night might simply be that individuals do not expect others to follow traffic signals during these hours. In contrast, during the day, witnessing others stopping at red signals influences one to do the same, regardless of the presence of CCTV cameras or law enforcement. We tend to do what everyone does. If we see someone else run the traffic light, we callously follow them. Implementation of stringent policies by the authorities require behavioural change in individuals. Merely making laws is not sufficient. In order to ensure that laws are followed in true letter and spirit, the Government and other regulatory bodies should involve members of civil society to ensure better compliance, coming from within instead of being enforced upon the person.




By Meet Mehta