Opportunity is Not Everything: How Belief Systems and Mistrust Shape Responses to Economic Incentives

28 Pages Posted: 24 Aug 2005

See all articles by Karla Hoff

Karla Hoff

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Priyanka Pandey

World Bank

Abstract

We experimentally investigate in village India how belief systems that hierarchize social groups affect the groups' responses to economic opportunities. Earlier we found that making caste salient hurt low caste performance both absolutely and relative to the high caste's. To examine the possible role of mistrust, we manipulate the scope for discretion in rewarding performance. When offered a gamble in which success mechanically triggers rewards, making caste salient has no significant effect. Instead, it is in the case with scope for discretion that making caste salient creates a large caste gap in the proportion of subjects who refuse the gamble.

Suggested Citation

Hoff, Karla and Pandey, Priyanka, Opportunity is Not Everything: How Belief Systems and Mistrust Shape Responses to Economic Incentives. Economics of Transition, Vol. 13, No. 3, pp. 445-472, July 2005, Available at SSRN: https://ssrn.com/abstract=776989

Karla Hoff (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/khoff

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Priyanka Pandey

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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