INDIANOMIX – MAKING SENSE OF MODERN INDIA BY VIVEK DEHEJIA AND RUPA SUBRAMANYA – EVERYTHING IS ECONOMICS!

Why do we Indians have a habit of not being on time for so many occasions? But how do we manage to be on time when using public transport or arriving at work most of the time? Why do people in Mumbai have a problem hiring auto-rickshaws? Or interestingly, how are the biggest lotteries in the world and Jawaharlal Nehru’s failure to lead India to victory in the 1962 Indo-China war related to each other? The answer, which this book gives, is Economics. 

Indianomix – Making Sense Of Modern India, written by economists Vivek Dehejia and Rupa Subramanya, is a short, yet interesting book on how economics, along with various other disciplines such as biology and psychology, play a very important role in understanding everyday life. The book tries to portray incidents with different consequences and helps us show that behind all those incidents there are some concepts from economics working their way. It does that through six engaging chapters, which pose questions that force us to see everyday events through a different lens. 

The first chapter discusses how understanding market failures and game theory helps us in framing a policy that would help smokers to quit smoking. The second chapter talks about how understanding several concepts from behavioral economics, such as overconfidence bias and cognitive failures would help prevent road and rail accidents due to careless passengers. The third chapter talks about how framing counterfactual stories and asking questions such as “what would have happened if it hadn’t happened?” help in evaluating policy decisions. The fourth chapter discusses how luck has played an important role in Indian politics, and also how not taking into different biases severely affects outcomes of surveys, which happened when media pundits wrongly predicted a win for the NDA coalition in 2004. The fifth chapter revolves around beliefs and how it affects different markets in the Indian economy, such as the stock market, and the final chapter talks about how news headlines can be misleading and knowing actual in-depth information needs more extrapolation.    

Apart from the fact that this book is written in a lucid manner where every concept from economics is explained in simple language which doesn’t make the reading experience tedious. One good thing about the book was the fact that it highlighted how these concepts from microeconomic theory can be effectively used to frame sound policies. Conventional microeconomics, in general, is notoriously known for its impracticality; it takes in utopian assumptions such as an always-rational decision-maker, perfect information, and freedom for any firm to enter and exit the market, for the sake of simplicity. This book, using the help of different other branches of economics, helps the common people understand that these concepts can be used to frame public policies effectively too. For example, as this book explained, understanding how people think helped the Delhi Police to frame initiatives that made people walk on the pedestrian path and the Western Railways to frame a campaign which made people not cross on railway tracks. The examples may be small, but it can go a long way in framing initiatives that combat more pressing issues, such as climate change. 

Despite these plus points, the book still does have its pitfalls. One criticism is that there are places where the authors wholly believe that some phenomena can be completely explained using concepts from Economics and Psychology, disregarding the fact that these phenomena and outcomes can say a lot about society, politics and the changes that take place in them. For example, this book claims that the reason the UPA coalition won the elections in 2004, despite the odds against them, is as similar to a coin being flipped. Although the point of this argument was to show that people shouldn’t always believe the “werewolf” media pundits who do nothing but steer a conversation in television towards a particular spectrum of thought (and eventually, chaos), it should be noted that there were more important reasons as to why the NDA alliance lost. This book refuted the backfiring of the “India Shining” movement as a reason, as the popular vote difference between the two alliances were just around 2%. 

But a paper, written by Rahul Verma for the University of California Berkeley Press, highlights the same facts, but different reasons. The paper showed that although caste and class equations did not matter at that time, the important reason for NDA’s loss was their decline in delivery on all the levels of the Government: the Centre, the State, and the Constituency. Another paper, by Baldev Raj Nayar, highlighted another factor of the ‘India Shining’ movement, which was the fact that the Congress and the alliances were able to align their campaigns as a ‘pro-poor’ campaign focussing on the common man while highlighting the BJP and its allies as a ’pro-rich’ party favoring the upper-middle class. The paper also highlighted how the UPA’s alliances with the DMK in Tamil Nadu and some regional parties in Bihar helped the alliance to secure power in 2004. This is highlighted from the fact that Congress only had 145 MP’s in the cabinet. Thus, the UPA was able to win the elections not only by luck but also by some planning within alliances.  

The book, in the end, is interesting and makes a lot of sense, but applying what this book tells in real life should be approached with real caution. 

Siddharth G is a second-year undergraduate student pursuing Economics and Political Science from Ashoka University. 

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