Courtesy of Vivek Dehejia Vivek DehejiaOutsiders often find India baffling, but Indians themselves can be at a loss to explain certain things that go on in the country. For example, why does the local stock market drop during a lunar eclipse? Or why isn't India's Independence Day celebrated on the actual day British colonial rule ended?
In their new book, “Indianomix: Making Sense of Modern India,†Vivek Dehejia and Rupa Subramanya draw upon cutting-edge cognitive research and behavioral economics to answer questions like these and explain why Indians act as they do. (The book, published by Random House India, is available in print in India and as an electronic book worldwide.)
Mr . Dehejia is an economics professor at Carleton University in Ottawa, Canada, and is a contributor to India Ink. Ms. Subramanya is an economics journalist in Mumbai who writes a weekly column for The Wall Street Journal India. India Ink spoke with Mr. Dehejia about the inspiration for the book and where he thought India was headed.
How did this book on India's idiosyncrasies come about?
From the get-go, our intention was to write an India book that hadn't yet been written: neither macro nor micro, but selecting a range of themes which we felt were underexplored, at least by economists, and cast some light on them. We also wanted to make the book interdisciplinary, drawing on insights from fields as diverse as history, psychology, political science, and even the study of religion. And within economics itself, we were keen to incorporate insights from recent research in “behavior al†economics â€" in other words, looking at how humans actually behave, with all our cognitive biases and failures, rather than how economists generally assume we behave, which is as rational, maximizing calculators.
Above all, we wanted to do all of this, keeping the book fun and accessible to the general reader, while at the same time grounding everything in the best research that's out there and our analysis of it.
You write about the god-fearing “uniquely Indian†approach to business management, referring to Hindu mythology. Then shouldn't we expect India to be void of corruption (bribe-giving) and jugaad (ad hoc innovation)?
You're asking about a chapter in the book in which we make the connection between culture, including religion, and economic outcomes and behavior. We thought it important to explore this, both given the obvious centrality of culture and religion to the lives of many Ind ians, as well as new developments at the cutting edge of academic economics, which increasingly emphasize the importance of culture and other “slow-moving†variables in helping to explain economic phenomena.
As to why a “god-fearing†approach to business management doesn't simultaneously imply the absence of corruption or “jugaad†culture and religion are clearly only two of many determinants of the choices made by individuals or businesses in particular circumstances. So while the moral teachings of a religion may point to, say, bribe-giving as unethical, you can't divorce a particular situation from a host of other constraining factors, which, of course, include economic incentives. No amount of worship of the Hindu goddess Lakshmi [who governs wealth and prosperity] is going to speed up the glacial pace of Indian bureaucracy!
Courtesy of Random House Publishers India The front cover of “Indianomix.â€India's media has embraced sensationalist styles of presenting TV news and emotionally charged headlines, extortion cases and generally rowdy tactics. Is this the human proclivity to react more to bad news than to good news, or the negativity bias, at work?
We don't suggest that the “negativity bias†is uniquely Indian. Indeed, we draw on research from cognitive psychology, which suggests that humans everywhere suffer from some version of this bias. We tend to attach more weight to bad news than to good. And sensationalism, crassness and dubious journalistic practices in news are also evidently not uniquely Indian.
I think a more pertinent factor in helping to explain the state of Indian journalism today â€" both print, broadcast, and the new digital medium â€" is the intense competition that exists in a large and growing market. This is very much like the United States of an earlier era, the period of “muck-raking†and “yellow journalism,†when a city like New York, for instance, had five, six or even more daily newspapers vying for the dollars and the eyeballs of the reading public. So while there is some truly awful content out there, there are, for instance, some high-quality discussion programs on the news channels and some superb op-ed writers for the mainstream broadsheet dailies.
In the last few months, we've heard about gang rapes and rapes in India. Why do you think these happen? Are things really worse for women in India than they were 50, 100 or 500 years ago?
This is a really tough question. We devote a large chunk of one chapter to looking at crimes against women and some possible explanations for the apparently rising trend in such crimes. I say “apparently†because the quality of the data is hotly contested. While many violent crimes, especially violent crimes against women, including rape, tend to go unreported in India as they do elsewhere, there is some recent research which suggests that the rate of reporting may be going up.
What that means, paradoxically, is that a larger recorded number of crimes against women may not be all bad news: more women are coming forward to report such crimes rather than not doing so because of the social stigma that attaches in a still-conservative society such as India. So to the extent that the uptick in the statistics represents better reporting, and to the extent that some of these crimes will lead to prosecution and conviction, that's good news.
To the extent that the increased reporting represents an actual increased incidence of crime against women, it's obviously bad news. We simply don't have the quality of data, and statistical analysis of that data, to say anything much more definitive than that.
As to the question of the underlying causes of violence against women, there's suggestive research which points to an increasingly skewed sex ratio - that is, more men than women, which is due in part to sex-selective abortion and in part to higher mortality of women in later life - as being one possible explanation among a host of candidate explanations. There's a statistically robust correlation between a skewed sex ratio and a higher murder rate, including of women, for instance â€" and not just in India, but in places like China too. The trouble is, in statistics, correlation doesn't necessarily imply causation, so it's hard to know in which direction the causality runs or if something else is going on that the data haven't picked up.
A lot of your research, aside from thi s book, focuses on international trade and economies. Given India's predictable chaos, can you tell us what India's global economic path will be?
Well, if I had a really good answer to that one, I'd probably be sitting in an office in New Delhi advising the prime minister or perhaps in an office in New York advising a hedge fund manager!
Seriously, though, the last few years, especially this past year, has seen some pretty grim economic news for India. The dropoff in the growth rate, which, if we're lucky, will be around 5 or 6 per cent in the coming year, is the most worrying, as are continued concerns about inflation, the fiscal deficit, the balance of payments, and on and on. The good news is that, at long last, the current government seems to have woken up to the need to jump-start its apparently moribund economic reform agenda, and seems to have taken it up with renewed vigor, albeit towards the end of its mandate.
At the to p of my list would be reforming the arcane labor laws which retard the growth of labor-intensive manufacturing in India â€" without which India has no hope of aspiring to Chinese or East Asian style double digit growth rates â€" and regulatory reforms which increase transparency and reduce the discretionary authority of politicians and bureaucrats, which is an essential ingredient to combating corruption and excessive red tape that clog the arteries of Indian commerce and business.
So, if this reform agenda is aggressively pursued, I remain optimistic about India's medium- and longer-term economic prospects. If it's not, and the country's politicians stay in a “business as usual†mode, the Indian economy could be in for even a rougher ride in the coming years. Let's hope the optimistic scenario prevails.
(This interview has been lightly edited and condensed.)
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