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The Cost of LGBT Exclusion to the Economy of India


LGBT (1)

By Viswas Viswanath

The Cost of LGBT Exclusion to the Economy of India

The lesbian,  gay,  bisexual,  and transgender  (LGBT) human rights debate is usually understood through a socio-cultural, or ethical lens, but the inequality and exclusion of LGBT people are also economic development issues.  This essay seeks to highlight the true cost of stigma,  hostility- negative attitudes toward LGBT people of the Indian economy in social institutions of education, employment, families and health care.  While exploring the potential crisis of the underlying behavioural economic attribute, Identity Bias.

Behavioural  Economics  is  contrary  to  homo  economicus.  The  latter  is  the  concept  in  economic theories showcasing humans as rational and self-immersed agents who maximise their pursuits with subjectively optimal choices. Behavioural Economics does not assume that human choices are made in isolation or to serve their singular interest. Along with cognitive and emotional framework, an important influence are social forces, the decision is made by individuals who are guided and driven by their social environments.

This about the last time you purchased a piece of clothing for an event. Perhaps it was a suit. You may have chosen to buy it from a popular brand or the one you have owned already in the past. You may have visited a tailor to fit yourself one. But your decision making was not that binary, you had to customise your apparel from different attributes (the type of fabric, colour, nature of the event, etc.) and the final purchase made reflected the social norms and expectations.  This illustrates a number of concepts from behavioural economic theories.

Social norms are implicit or explicit behavioural expectations or rules within a society or group of people and have an important component of identity economics, which regards economic actions to be the result of both financial incentives and people ’s conceptualisations.  Our choices are not merely a matter of taste, they are the influence of the society, as manifested in gender roles.

Norms vary across cultures and context. Social norms dictate suitable behaviour or actions taken by the majority of people. In India, clear evidence of stigma and exclusion exists for LGBT people.


Exclusion in Education – Diminished Human Capitol

A basic comparison of literacy rate derived from the 2011 census shows the stark difference in literacy rates for those using the ‘other’ gender option. Only 46% of those using the ‘other’ gender option compared to 74% of the other population as literate. This could be the result of harsh and pervasive harassment of transgender people in the educational environment.

Data of educations levels of Men who have Sex with Men (MSM) collected through Family Health Survey  (NFHS)  of  2005-2006  International Institute of Population  Sciences  (IIPS)  and  Macro International 2007 along with National Aids Control Organisation (NACO).   Used to compare the levels of education of MSM to those of all men in India suggests that MSM are less likely to receive over  12  years  of  education  compared  to  Urban  men  but  more  likely  to  have  8  to  11  years  of education compared to others (The data comparison is not precise due to the difference in concept of education between the surveys).

When the discrimination results in lower returns for LGBT workers investment in human capital than non-LGBT workers return for similar human capital, the LGBT people may be less likely to make investments towards improving the standards. Unfortunately, data on the returns to education for the LGBT population in India is not available.

It is important to note the interconnectedness of forms of exclusion. Exclusion from social settings, education and health disparities among the LGBT  people may play a  role in human capital investment.  Since better health and longer lives raise the incentive for individuals to invest in education and other forms of training that pay back over time. Therefore, the disadvantage in one sphere can have an impact on another sphere. (Inclusive policy should promote wholesome changes in various economic and social settings of the society.)

Exclusion in Employment – Reduced Productivity and Output

Discrimination against LGBT people in employment settings includes inefficiencies that reduce the productivity of labour and the overall economic output. A 2013 survey of college-educated, white-collar LGBT workers in India showed that 56% of them encountered discriminations in the world place for their sexual orientation.

Such treatment can reduce the economic contribution of the  LGBT  people, directly through underemployment,  unemployment, and lower productivity and through reduced responsiveness, lower investment in human capital and health. Further deteriorating the condition and driving the LGBT people into higher rates of poverty.

When the identity bias at workplaces leads to underutilisation of the human capital of the skilled labour force from the stigmatised group or passing over to hire and be replaced by less skilled workers from a favoured group. The degree of inefficiency would rise. The under-utilised and un-utilised skilled workers make up a loss to economic output.

A vast majority of the third gender communities in Northern India make a living through begging, sex work or dancing at weddings. A community-based sample of MSM in Chennai found that two- thirds had an income below Rs.130/Day. The Tamil Nadu Transgender Welfare Board established in 2008 to better the social-economic position of the transgender people (aravanis) provides self- employment grants, health care, income assistance, housing assistance and a monthly pension of Rs. 1000 to eligible members. Resources that could be utilised in other sectors if not for the stigma and bias associated with the population.

A study in the United States, Netherlands, UK, Sweden, Greece, France and Australia by Klawitter showed a wage difference,  on an average gay and bisexual men earn 11%  less than their heterosexual counterparts with the same qualifications.  While no similar  studies have been conducted in India, it is possible to infer greater wage gap based on the wage gap for members of scheduled castes and tribes of India. (A 9% and 11% gap was estimated for members of scheduled castes and tribes and other backward classes respectively compared to the other communities with data from 1999-2000, by Madeshwaran and Attewell. India’s biggest passing crisis is this identity bias; stigmatised grouping and discrimination.)

A cost of psychological cost of hiding and perceived risk of disclosure, further, the impact of stigma is being forced to marry a different sex partner, their family decisions making changes in a different context and result in different economic decisions about the workforce. Particularly for the lesbian population, enormous pressure from her family and society to marry a man. While she might be more productive in the workforce and working in her home. Even the social and cultural norms on gender roles in the family, asking to start a family, forcing lesser investment from her in the labour force participation. The 2011-2012 Indian Labour Force data described that only 22.5% of women are in the labour force compared with 55.6% of men in the labour force.

Lesbian women in more accepting societies have shown increased economic output in lesbian family setting or single. Women whose careers have not be shaped by family constraints display better than heterosexual households in their greater accumulation of experience and other human capital.  So, ending the LGBT stigma might increase the labour force participation and economic output of lesbian and bisexual women (women in general).  Acquiring the next higher level of education would improve the wages earned by women, raising the GDP by an estimated 0.5% in India.  Thus, reducing joblessness rates of young women to those of young men, adding an additional 4.4% to the GDP in India.

Lost Earnings; A calculation could be derived from the loss of earning through LGBT stigma, using the figures from India’s National Sample Survey Office publication. The NSS data from 2011-2012 displays an average Indian worker employed for  6  days/ week for 52  weeks would earn annual earnings for wage/salary of Rs.74,507, for the self-employed workers and own account enterprises, it is Rs.48,157. This implies an average of Rs.55,532, multiplying this average by the proportion of wages would give an estimate of lost earnings for an LGBT worker.

The lost output would be much greater. Unfortunately, existing data are inadequate to qualitatively estimate the loss of economic activity in India. But it can be assumed to be based on discrimination in labour market that the economic output is lower than the full inclusion of the LGBT worker.

Lost Output due to Health Disparities

Health as a form of human capital has great implications for economic outcomes. Sexual and gender minorities in India face the same health challenges as others in India.  Along with the typical challenges, LGBT people face further mental and physical health issues.

Additionally, “Minority stress” and “micro-aggressions” against the LGBT people make it difficult for the population to attain health care or in poorer quality due to non-disclosure of information relevant to sexual practices by the patients. Depression is prevalent in a majority of the LGBT community. In Chennai, 55% of the community sample met the criteria for clinical depression. Astoundingly, one qualitative study of lesbians in India found that 4 out of 24 respondents had attempted suicide in their adult life.

The rate of contracting  HIV/ AIDs is higher among the sexual minorities of India as that for the population as a whole. It is estimated that for MSM the range of prevalence is between 7% to 16.5% and the prevalence estimates range as high as 55% among the transgender people.  Various present that the areas reported with greater levels of  HIV are associated with perceptions of anti-LGBT bias,   self-stigma, and discrimination.   Including harassment from   Police, to getting testing, information and other HIV related services. Also, the impact of low earning, insufficient education, low self-esteem and depression increase the likelihood of risky sexual habits among  the  LGBT people.

Disability-adjusted life year  (DALY)  which was estimated by the Global Burden of Diseases, Injuries and Risk  Factors  Study  2010  for  India,  a project that calculated the “disease burden”  or impact, of different conditions and injuries on years of life lost (YLLs)  and years lived with  a disability (YLDs). Adding YLLs and YLDs together provides the measure of DALYs. For the three highlighted convictions for the LGBT people in India. The Global Burden of Disease reports total DALYs values in 2019 as 9,265,130 DALYs for HIV, 10,038,500 DALYs with Major depressive disorders and 13,063,200 DALYs of loss by Self harm.

The economic impact can be translated by a rule of thumb proposed by the World  Health Organisation’s Commission on Macroeconomics and Health. By valuing one DALY as one to three times a country’s per capita income. In 2016, per capita annual income in India was Rs.1,16,580.40 or US$1,709.39.8  Three times per capita income is Rs.3,49,741.20 or US$5128.17.

Given these inputs for the analysis an estimated cost per health disparity can be calculated by using the following steps shown by M.V. Lee Badgett:

  1. Calculate the share of DALYs experienced by LGBT people with the benchmark rate (if the benchmark rate is the population rate, then the share will be simply the prevalence of being LGBT in the population);
  2. Calculate the share of DALYs at current LGBT prevalence rate (figure 1 times the excess risk);
  3. Subtract the figure from step 1 from the step 2 figure;
  4. Multiply figure from step 3 by total DALYs;
  5. Multiply figure from step 4 by one to three times per capita income.

(However,  these  estimates  would  only  provide  a  conservative  value  given  the  lack  of  broader aspects.)

An example if the domestic expenditure is India’s National AID Control Programme III, which was Rs.2,231,240,000. Future expenditures in the next chapters of the programme are predicted to be more than twice as large. If the stigma against the LGBT people reduced, the prevalence of health disparity among the population might fall. Government expenditures on HIV would fall, the funds may be allocated to be used for other subpopulations.


Speaking at O.P.Jindal  Global University during a  Gender Matters discussion Ms. A.Revathi,  a Namakal based writer and an activist working for the rights of sexual minorities, she is also a trans- woman of the Hijra  community. She recalled the struggle in her earlier days in finding property for rent when found after great difficult to her despair the contract would be broken in advanced to the previously agreed quantum.  Costing her loss of brokerage and leaving her in despair to find accommodation. Daily tasks such as hiring a rickshaw would be trouble, often impossible and when available, at an exuberant price. An already marginalised and poor community further distressed by social stigma, an economic persecution.

While many biases and prejudice are the result of quick impressions, identity bias is an automatic character due to the human reluctance and aversion to change. The heteronormative societal norms create an inertia and force strong negative behaviour toward the different, alien, in this case, the sexual minorities.

Even a massive crisis unfolding before the eye is difficult to predict. As everyone has a stake in the status quo and its survival, the various units in the current system will want to retain the stability. Further, the herd instinct of humanity imposes group behaviour and the compulsion to join the larger group, even when unreasonable. The current models of traditional economic theories do not fully understand the complexity of reality.   Insufficient understanding of the behavioural mechanisms of human psychology at an individual or societal level has left major gaps that may allow accurate predictions.

LGBT rights have long been perceived as a human rights and socio-cultural issue alone. In contrast, models of economic theories are too often exclusive of the human influence and behaviour. As this crisis manifests into a larger hurdle for the nation’s economy. It is essential to study the real cost of LGBT exclusion from the society through an economic outfit.  Such an understanding will bring forth the lack of reason in the perceived rationality of the masses. Therefore, promoting wholesome solutions for the improvement of marginalised communities and mitigating the damaged of such social identity (based) discrimination.


  1. The Economic Cost of Stigma and the Exclusion of LGBT People/ A Case Study of India M. V. Lee Badgett, Ph.D.
  1. Economic and   Financial   Crisis   Between   Traditional   Economic   Theories   and   Behavioral Economic Theories by Andrea Gradinaru, Ph.D, A;. Ioan Cuza
  2. so-difficult
  3. It’s (Not) All About The Money/ Using Behavioural Economics to Improve Regulations of Risk Management in Financial Institutions by Nizan Geslevich Packin
  1. Cost of  Homophobia  Literature  Review  –  Canada  by  Christopher  Banks,  Rochon Associated Human Resource Management Consulting Inc
  1. The Relationship  between  LGBT  Inclusion  and  Economic  Development:  An  Analysis  of Emerging Economies – M.V. Lee Badgett Sheila Nezhad Kees Waaldijk Yana van der Meulen Rodgers
  2. How Should the Financial Crisis Change How We Teach Economics? Robert J. Shiller
  3.  Safren, S.A. et al., 2009. Depressive Symptoms and Human Immunodeficiency Virus Risk Behavior among Men Who Have Sex with men in Chennai, India. Psychol Health Med., 14(6), pp.705–715.
  4.  Setia, M.S. et al., 2008. Men Who Have Sex with Men in India: A Systematic Review of the Literature. Journal of LGBT Health Research, 4(2-3), pp.51–70

Viswas Viswanath is a second year Masters’ student at Jindal School of International Affairs.

Featured Image Source: Mamba online

2 responses to “The Cost of LGBT Exclusion to the Economy of India”

  1. nice article and a perspective unexplored.
    very few give an eye in that way. But I heard few MNC’S are Lgbt friendly and holding chapters too.

    More than a sea change….. acceptance and humility….. that’s how it unfolds.

    Liked by 1 person

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