ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Sujoy ChakravartySubscribe to Sujoy Chakravarty

Behavioural Economics and Richard Thaler’s Contributions

What makes behavioural economics important for understanding human behaviour? What work has been ongoing in this field of study? What have Richard Thaler, this year’s “Nobel” prize winner, and his colleagues done to better understand human behaviour?

Experiments on Individual Decision-Making

Part 2 of the survey looks at experimental results dealing with individual choice. The discussion compares the two dominant experimental methodologies that govern individual decision-making experiments in social science. It then discusses decision-making experiments under two main heads - the psychology-oriented experiments (or what has now morphed into behavioural economics) and experiments that test observed behaviour against theoretical benchmarks derived from neoclassical microeconomic theory. The last section provides an overview and looks ahead to the future of experiments in decision-making.

Experimental Economics: A Survey

Over the past few decades, experimental methods have given economists access to new sources of data and enlarged the set of economic propositions that can be validated. This field has grown exponentially in the past few decades, but is still relatively new to the average Indian academic. The objective of this survey is to familiarise the Indian audience with some aspects of experimental economics. The survey attempts to bring to the interested reader a flavour of this field. The survey is presented in five separate articles after this introduction. The notes and references for all articles are at the end of the survey.

Emergence of Experimental Economics

The survey begins, in Part 1, with a presentation of the historical emergence of the subject and provides the methodological justification for economics experiments. In presenting the history of the field, Part I also discusses the forces that impelled or impeded its evolution.

Experiments in the Indian Context

Over the past few years, experimental economics has become increasingly visible in research activity in India.The concluding part of this survey offers a brief overview of experiments conducted in the Indian context. These have been largely field experiments.

Discrimination in an Elite Labour Market? Job Placements at IIM-Ahmedabad

Using data on the iim -Ahmedabad's 2006 batch of mba graduates, we find that graduates belonging to scheduled castes or scheduled tribes get significantly lower wages (19 per cent lower in domestic jobs and 35 per cent lower when foreign jobs are included) than those in the general category. This difference disappears once their lower Grade Point Averages are taken into account, suggesting that the large wage difference is due to the weaker (on average) academic performance of sc/st candidates. The study suggests that in the absence of any serious attempt to equalise school-level opportunities, the current policy of reservations at elite educational institutions will be insufficient to equalise career outcomes even for the minority of sc/st candidates who can benefit from them.

Food Insecurity in Gujarat

Using data that surveys sample households in the tribal area of rural Gujarat known as the Panchmahaals-Dahod and a non-tribal sample from Maliya and Jasdan in the Rajkot district of Saurashtra, we find the prevalence of large-scale food insecurity with less than 10 per cent of the population surveyed found to be food secure all 12 months in a year. A staggering 73.66 per cent (Panchmahaals) are found to be food insecure for more than six months in a year. The corresponding figure for Rajkot sample stands at approximately 19 per cent. This food insecurity is seen to be roughly consistent across poverty classification categories with similar distributions of food deprivation across both above poverty line and below poverty line households in our sample. Finally, the unavailability of food is found to be a seasonal phenomenon with unavailability peaking over the summer and monsoon and dropping off right before the winter months.
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