Social Networks, Identity And Economic Behavior: Empirical Evidence From India
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We know from economic theory and the sociological literature that (nonproductive) identity and social networks matter to economic behavior. The dynamic and endogenous nature of social networks, identity and the economic decisions, as well as the absence of detailed panel data well suited to analyzing evolving social networks and identity, have made empirical analysis of the effects of social networks and identity a challenging task. As a result, the literature has been limited in its ability to empirically identify when and where social networks and identity matter to key economic behaviors. This dissertation aims at filling this void by providing a better understanding on how identity and social network affect educational investment in children and agricultural technology adoption, arguably two key behaviors that crucially affect the welfare trajectories of rural households in developing countries. In the first paper I look at the role of social networks in the adoption process of Bt cotton, a new type of cotton available on the Indian market since 2002. The results demonstrate the importance of knowledge about the profitability of a new technology in the adoption decision. This knowledge is established through experimentation, observing other farmers' past inputs and outputs and talking to informed parties such as company representatives and input dealers. In addition, I find strong evidence of farmers imitating successful farmers and of social pressures inhibiting the adoption process of this new technology. In the second paper I investigate the role of social customs and norms in educational aspirations. I find that the aspirations that parents have for their children are a complex function of wealth, time preferences, the perceived costs and returns to education, and the prevailing social norms, customs and pressures with regard to age of marriage and old age care. I do not find any evidence of social pressures directly related to the level of education. In the third paper, we examine farmers' attitudes towards risk and find evidence that credit constraints in combination with a production set shaped by multiple technologies can increase the willingness to take up risks as farmers gamble their way out of poverty.