Opening a savings account? You need to confirm your identity. Enrolling for Social Security or Medicare? They check your credentials.
But what if you cannot prove who you are?
Signing up for India’s Unique Identity (UID) program has enabled many millions of Indian citizens to pass an identity check for the first time. Described by the Economist, from the top down, the program is building a biometric data base. From the bottom up, so far, it has empowered more than 110 million people. Rising by 20 million a month, the numbers represent people getting eye and finger scans in municipalities across the country.
With the scan, you can prove that you are you.
As a result, people can engage in financial transactions that previously had been impossible. Welfare payments can no longer be stolen with fake IDs. Cash can be placed into bank accounts. People can save and write checks and get credit. They can apply for jobs more efficiently.
However, in addition to identity, aren’t we talking about economic growth?
Maybe, we can even say that the Indian program resembles the onset of Social Security during the 1930s. Yes, the U.S. program was a social safety net. But also, didn’t we secure a fundamental source of proving our identity?
The Economic Lesson
The Indian UID has been successful because of the appropriate incentives. Employees of the private firm implementing the program are given sign-up quotas and then receive their pay when UID numbers are issued. So, instead of an inefficient massive government bureaucracy stumbling, as the program’s agents, the private sector is achieving success.
An Economic Question: How do people in the U.S. prove their identity?