Arya, Yatish (2021) Essays on inequality and persuasion. PhD thesis, University of Warwick.

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Abstract

In my thesis, I study questions related to the issues of economic inequality and political persuasion. I apply insights from behavioural sciences and general equilibrium to study these phenomena. In my first chapter, we (co-author and I) understand what makes people respond to political persuasion. We apply salience theory (studied extensively in behavioural sciences) to understand voting behaviour. In my second
chapter, we explore the role of identity and pride in contributing to group-level inequality. It also highlights one of the reasons why religious groups might resist modern welfare-enhancing interventions. Finally, my third chapter tries to contribute to the theory of economic policy by expanding the set of instruments that can help our society to deal with economic inequality. We study the effectiveness of our policy instrument and compare it to other traditional policy instruments in a general equilibrium framework.
The three chapters are summarised below.
Chapter 1: Leaders often send political messages to try to influence citizens and voters. But, what makes their messages more or less salient? One possibility is that the salience of political messages increases if voters are exposed to events related to the messages. We study this question using the 2019 national election in India, where Prime Minister Modi’s speeches focused on his aggressive response to deadly attacks on soldiers. Using a difference-in-differences identification strategy, we find that the vote share of the PM’s incumbent party increased by 4.6 percentage points in the home constituencies of dead soldiers. Text analysis of Modi’s speeches reveals that only deaths referenced by him affect public opinion, but deaths not referenced by him do not. Our paper is one of the first to study how event exposure interacts with political messages to affect voting behaviour.
Chapter 2: Religious groups sometimes resist modern welfare-enhancing interventions, adversely affecting the group’s human capital levels. In this context, we study whether the two largest religious groups in India (Hindus and Muslims) resisted western education because they shared religious identity with the rulers deposed by British colonizers. We find that Muslim literacy in an Indian district under the British is lower where the deposed ruler was a Muslim, while Hindu literacy is lower where the deposed ruler was a Hindu. To deal with possible omitted variable bias, we instrument the religion of the deposed ruler with distance from the birthplace of Shivaji, a Hindu king who rebelled against the Muslim empire. We find other results consistent with the hypothesis espoused by some historians that when foreign occupiers dislodged Islamic rulers, Muslims showed resistance to the inventions/institutions introduced by the occupiers. Our paper is the first to document a similar effect among Hindus in India empirically.
Chapter 3: Inequality and skewed distribution of ‘essential’ goods remain problems even in the 21st-century world. We consider a general equilibrium framework where some goods are considered essential, whereas some are not. Essential goods are relevant for distributional concerns, up to a certain level of consumption. We then compare the effects of four policies on social welfare: subsidies, direct transfers,
quantity rationing, and a fourth policy that we introduce and call Market Segmentation (MS). In MS, the market for essentials is segmented from non-essentials, i.e. they are not freely tradeable with each other. We find that if the relative number of low-income individuals in the economy is large and “essentials” are consumed inelastically, MS outperforms direct transfers and subsidies. We also show that in our model, MS weakly dominates quantity rationing. We discuss how market segmentation can help policymakers to deal with issues such as automation and superstar phenomenon (Scheuer and Werning, 2017).

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HC Economic History and Conditions J Political Science > JA Political science (General)
Library of Congress Subject Headings (LCSH):	Communication in politics, Identification (Religion), Religion and politics, Market segmentation, Monetary policy
Official Date:	December 2021
Dates:	Date Event December 2021 UNSPECIFIED
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Mukand, Sharun W. ; Akerlof, Robert J.
Sponsors:	University of Warwick. Department of Economics
Format of File:	pdf
Extent:	vii, 168 leaves : colour illustrations, charts, map
Language:	eng

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