Principal Investigator: Miguel Alexandre Fonseca. Lead Organisation: University of Exeter
Co-investigators: Surajeet Chakravarty; Sugata Marjit
resource scarcity is one of the major challenges to policy-makers in developing countries. An important aspect of resource scarcity involves public goods. Lack of public goods, like health and education, can significantly reduce the welfare of individuals and households and often this affects the poorest the most. In India, these issues are amplified by the existence of a long-standing social structure based around caste and religion. Such social fragmentation can result in social exclusion and/or lower public good provision.
This project investigates the behavioural foundations of inter-group discrimination on economic performance in rural West Bengal, India. It builds on existing household survey work on religious- and caste-based social exclusion in villages in West Bengal by conducting a series of field experiments.
Field experiments study the decisions of agents who in their daily lives are affected by poverty, and help determine the extent to which their preferences regarding caste, ethnicity and religion determine their willingness to socially exclude others or themselves to be excluded.
This project‘s findings will help policy-makers to the extent that they facilitate the identification of the right policy response to social exclusion and lower economic performance, which in turn are key determinants of poverty.
The beneficiaries of this research project will be academics, Indian, and international government agencies, NGOs as well as anyone in the wider civil society who is interested in issues of poverty, racial and/or religious discrimination. We will concentrate our attention in this section to non-academic beneficiaries. In terms of policy users, we plan to produce a non-technical impact report, which will be generated at the end of the grant period. This report will contain not only a summary of the findings of the project, but also their policy implications to the West Bengal Government and India-based NGOs. We will organise a workshop in which we will present our findings to representatives from the local and state governments, NGOs and other parties such as USAID or the World Bank - the latter not only has an interest in issues related to caste-based discrimination, but has engaged in collaborative research with the CSSSC. We envisage that our research will impact on poverty alleviation efforts and policy indirectly. It will do so by identifying the channels (in particular inter-group discrimination) through which social fragmentation along religious lines affects public good provision. Understanding why the presence of multiple social groups (typically ethnic and/or religious) in a given society leads to lower provision of public goods allows governments and NGOs to create the appropriate policy response and maximise the return to aid investment. A case in point is the provision of a local public good, such as education. Two social groups like Muslims and Hindus may prefer not to share a local school for two very different reasons. On the one hand, they may prefer two different types of public good: madrassas typically segregate students along gender lines, while state schools do not, which may be important to more orthodox Muslim families. On the other hand, members of one group may not want to share the public good with people of the other group. The optimal response is quite different depending on the cause. In the former case, subsidising madrassas is optimal, as it will lead to higher rates of school attendance by women from Muslim backgrounds. In the latter case, encouraging attendance into the state school system may be more beneficial in order to reduce prejudice across religious lines. Finally, we hope to be able to introduce experimental economics as a valid new tool to policy makers. Policy designers increasingly resort to experimental methods to test the applicability of particular market mechanisms. Examples include the design of 3G bandwidth auctions in the UK in 2000 (Binmore and Klemperer, 2001) and the sale of CO2 emission permits in Australia (Cason et al, 2003). We hope to demonstrate that economics experiments can also be useful tools to uncover underlying behavioural mechanisms around which one can tailor policy. The timescale for impact to be realised is likely to exceed the duration of the grant. The main means to achieve impact (the workshop and the report) will be realised at the end of the grant period. As such, we expect that impact of the research in terms of policy and wider community will be felt in the 2 years following the completion of the grant. We hope this will happen through the recognition of the effect of discrimination in the design of poverty alleviation policies.