Dienstag, 11. September 2012

Illusion therapy: How to impose an economic shock without social pain

Contrary to the popular belief, the Iranian government doesn't work without any plan. You don't agree? Let us read some parts of this article (you may read the full article here):

Illusion therapy: How to impose an economic shock without social pain

ordered by Department of Planning and Budgeting, Research Center of Iran’s Parliament, 1583745714, No 131, Sepahbod
Gharani Street, Tehran, Iran
This study attempts to demonstrate how a government launched an economic structural reform plan that
previous governments, fearing a serious social backlash, had been unable to implement over the course
of 30 years. The findings show that the Iranian government used “illusion therapy”, a package of econopsychological
techniques, to implement IMF-backed “shock” economic reforms to long-standing energy and food subsidies, without facing the expected social reaction.


Table 1 (Pg 105 - [7/13])
The causes of social acceptance of subsidy reforms.

1 Uncertainty about the amount of the change in the welfare of the household 
2 Distribution of resources resulting from the removal of subsidies and other sources 
3 Uncertainty about the amount of inflation resulting from the plan
4 Ambiguity and information confusion about the procedure, timing and the results of the implementation of the plan
5 Information bombardment (fierce campaign in the state media about the “necessity” and the “interests” of the implementation of the plan)
6 Information blackout (classification of some national statistics such as unemployment and the inflation rate to create or maintain the illusory atmosphere)
7 Announcement of multiple prices for the goods that were to have their subsidies removed
8 Repeated false or somewhat false news and media shocks imposed on public opinion, months and even one to two years before the execution of the Plan that released the emotional energy of the society and reduced the social sensitivity to the plan and accustomed them to the final shock
9 Some price controlling measures associated with the implementation of the plan 
10 Other factors

To study the situation at the “crowd level” and to analyse the behaviour of the people during the shock, the researcher, as an advisor to one of the most watched economic programs on national television at the time of shock, With You (“Ba-Shoma”), designed a sequential series of polls and the show asked the people to participate in it daily via text message. The survey was conducted three months after the shock, when no social backlash was seen in the short run. Approximately fifty to eighty thousand people participated each day. The geographical distribution of the participants was countrywide, approximately two thousand people for each province (Iran has 31 provinces).
The results of the TV survey showed that that most participants felt that their economic situation had either worsened or had not improved three months into the plan. To measure individuals’ sentiments, two questions of different types were posed to clarify the results should the responses prove contradictory. The first question asked viewers “What percentage of your increased expenses have been compensated for by the subsidies you have received?” Only 4% believed that the amount they received exceeded the increase in costs.
Two days later, the same question was posed another way to evaluate the compatibility of the answers. Viewers were asked: “In your opinion, how has the subsidy reform plan affected your life?” Only 15% believed that the reform plan has improved their living conditions.
Comparing the results of the two polls, the general feeling of the people is that the Subsidy Reform Plan was not in their interest.
But, how do individuals view the impacts of plan on the other strata of “society”?. . . On another program, they were asked to answer this question via SMS: “In your view, what changes have reform plan created for people in various walks of life?” In this question, it was emphasised that individuals not consider their own situation when answering the question.
Answers changed markedly. Only 37% believed that the plan had worsened living conditions. Comparing the results of this opinion poll with the two previous polls shows that individuals do not have appreciable illusions about themselves but they do have illusions regarding the social general situation.



The study shows that the illusion therapy caused the social energy directed against the reforms
to be released over a longer time horizon instead of explosively in the short run.

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