Social divisions and interpersonal financial transfers in India

A field-lab experiment amongst slum populations in Chennai

Thomas Bossuroy (University of Cape Town, South Africa)

Joel Selway (Brigham Young University, USA)

Conference on Social Cohesion and Development

Jan 20, 2011 – OECD, Paris

***

Social divisions and social interactions

• Communication and cooperation is harder across social groups... • preference for group mates (Lind, 2007; Karlan, 2005) • diminished trust in divided communities (Alesina and La Ferrara, 2000) • greater difficulty in communication (Wacziarg and Spolaore, 2009) • failure to sanction freeriders (Greif, 1993) • diversity of preferences (Alesina, Baqir and Easterly, 1999)

... which leads to poor economic performance in divided societies • the “ELF” dummy, poor public goods provision etc

• However, societies are typically divided along a variety of cleavages • anthropological works on clans, fraternities (Evans-Pritchard, 1940) • variations in the salience of divisions: ethnicity, gender, religion, political alignment, generation, economic status (Fearon, 1999; Posner, 2004) • cross-cutting cleavages may hold societies together (Dunning and Harrison, 2010)

• What is the impact of cross-cutting cleavages on social interactions? • India as a fascinating field of investigation

The dictator game

• Computer-based lab-experiment • Participants have to divide 10 coins between

-themselves - player 1 - player 2

• Information about the three players is displayed (or not) on the screen

randomly picked from the pool of participants

The information screen

The dictator game

• Computer-based lab-experiment • Participants have to divide 10 coins between

-themselves - player 1 - player 2

•Information about the three players is displayed (or not) on the screen

randomly picked from the pool of participants

• Four characteristics: caste (jati), religion, level of education, area

• Six random variations in the levels of information

Participant: -Visible -Anonymous

Players: -Picture + Information -Picture only -Information only

• Each participant plays 10 rounds, each round with different players and information levels

Sample of participants

Gender Religion Male 26.4% Hindu 75.1%

Female 73.6% Christian 17.6% Education Muslim 5.9% Primary School or Less 31.1% Sowrastra 1.5%

Middle School 37.0% Area Secondary or More 32.0% Chetpet 9.1%

Caste Chindadripet 16.7% Adi Dravidar 67.5% Choolaimedu 4.1% Vanniyar 5.3% Kodambakkam 8.5%

Labbai 4.7% Nungambakkam 15.3% Vellalar 4.4% Pudupet 9.7%

Listed Religion* 4.1% Teynampet 15.8% Nayakar 3.8% Thousand lights 20.8%

Other 10.2%

• Representative sample of 410 individuals in the slums or adjacent areas of Central Chennai, 341 participated (no apparent self-selection bias)

• Daytime recruitment: over-representation of housewives

• Majority of Adi Dravidar (“untouchables”), Hindu, below the poverty line, having menial jobs (unemployed, domestic services, construction, petty vendors)

0.2

.4.6

Den

sity

0 1 2 3 4Average amount given (Rs)

Amounts given

•A strong sense of equity: 3-3-4 is the most common distribution

Impacts of separate cleavages

All rounds

Explicit information

only

Same jati 0.06*** 0.09*** 0.09*** 0.13***

(0.02) (0.03) (0.02) (0.04)

Same religion 0.01 0.01 0.03 0.01

(0.02) (0.03) (0.02) (0.03)

Same area -0.05 -0.05 0.00 0.02

(0.03) (0.03) (0.03) (0.04)

Same education -0.01 -0.01 0.03 0.03

(0.03) (0.03) (0.03) (0.03)

Fixed effects N Y N Y

Observations 6794 6794 4568 4568

R-squared 0.48 0.48 0.49 0.49

• Common caste belonging significantly raises the amount given

• Other features do not show any effect

• The effect only exists when explicit information is given. No inference from the picture only.

Impacts of cross-cutting cleavages (1) (2) (3) (4)

Same Jati 0.12*** 0.19** 0.17*** 0.21**

(0.04) (0.08) (0.06) (0.08)

Different Religion -0.01 -0.01 -0.01

(0.04) (0.03) (0.03)

Different Neighborhood 0.02 -0.08 -0.06

(0.04) (0.08) (0.06)

Different Education 0.03 0.03 0.02

(0.03) (0.03) (0.04)

Different All Three . 0

. (0.03)

Same_Jati X Different_Religion 0.01

(0.06)

Same_Jati X Different_Neighborhood . -0.02

. (0.05)

Same_Jati X Different_Education . 0

. (0.04)

Same_Jati X Different_All_Three . -0.04

(0.04)

Fixed Effects Y Y Y Y

Observations 4568 4568 4568 4568

R-squared 0.49 0.49 0.49 0.49

•Social distance doesn’t impact exchanges but diminishes the salience of caste. •Caste as a proximal criteria for social preference

Being visible or anonymous

Participant is visible Participant is anonymous

• When visible, participants consider social distance: decreasing effect of caste

•When anonymous, flat level of (low) caste-based discrimination

•Reciprocity mechanisms: equilibrium of caste preference within the social group

Conclusion

• Caste is a stronger determinant of social interactions than religion, neighbourhood or education, when explicitly revealed

• The impact of caste diminishes with social distance measured on other dimensions: proximal cleavage

• Caste-based discrimination reflects a within-group social equilibrium rather than innate preferences

• Contributes to the understanding of WHICH social boundaries matter (caste), WHEN they matter (local context), and WHY they matter (social equilibria)