What do you think about Demonetization ?

hi

Today morning, over breakfast, a colleague of mine was beating down the demonetization idea and his central argument was that it was causing a great deal of discomfort to people.

In support of his argument he narrated an incident. He told us that he was having dinner the previous evening at a ‘Darshini’ (a local mid-range restaurant), and one of the customers there wanted to pay with a 500 rupee note and did not have any lower denominations.

However the cashier resolved the situation by telling him that since he was a regular customer he could just eat his food and pay the tab later.

I connected with this story immediately because on saturday night I had gone to Subway (a sandwich shop chain) with my 9 year old son and his school buddy who was staying the weekend with us.

I had assumed I would pay by credit card, but it turned out that the their credit card machine was not working.

Just like the cashier at Darshini, the shop owner at Subway (who was present in the shop), allowed us to eat our meal on credit with the understanding we would pay in the next couple of days.

In this case I was not even a regular customer. We landed up chatting a bit and I learnt more about our local Subway shop and the shop owner than I would otherwise have known.

The two stories (my own experience in Subway, as well as my colleague’s observation of the transaction in Darshini) were remarkably similar.

However what surprised me was that while I had come home that day, touched by the Subway owner’s warmth and extension of support, my colleague was using a similar story to fortify his arguments on why the demonetization initiative was a failure.

What led the two of us (my colleague and me), two equally intelligent human beings to pick very similar data and information (in this case the incidents at subway and darshini) and then use it to ‘justify’ or reach very different conclusions?

Today, on Nov 8, 2017, we complete one year of demonetisation in India. 8 November 2016 was just a date until Prime Minister of India, Narendra Modi announced Demonetisation.

The difference in the conclusions drawn by us is best explained through Confirmation Bias.

Confirmation Bias is one of the most well researched human biases and it is also one of the most pervasive.

After one year of demonetisation, Government is still unable to give exact numbers on demonetised notes, black money, defaulters etc. Let us discuss some facts about on demonetisation in India on Demonetisation’s first anniversary:

It is defined as the inherent human tendency to interpret new evidence as a confirmation of one’s existing theories and beliefs.

My colleague and I both had our own private theories related to the demonetization well before the incidents at Darshini and Subway occurred.

My colleague's theory was that the initiative is a disaster and will cause trouble for people.

Therefore he concluded that the cashier and the customer had been troubled by the ‘experience’.

My theory was that this initiative was going to usher in positive change for our country and community.

This made me prone to conclude that the ‘situation’ had led to the formation of a refreshingly pleasant human connection.

Decades of research tells us that our private theory in our heads is going to significantly influence the way we interpret the incidents that are unfolding around us

What did you conclude about the demonetization initiative as soon as you heard about it?

Did you form an opinion that it was going to help us change as a country, or did you decide upfront that it was going to create trouble?

None of us is exempt from the powerful effects of confirmation bias and yet confirmation bias is not the only bias that has been driving our individual and collective sensemaking over the last few days.