Discover the Voice of the Young in India with Arnab Sen!
- Introduction
- Background of the Interviewee
- Choosing Christ University
- Experience at Christ University
- Research Work on Demonetization
- Consumer Perspective on Demonetization
- Decision utility versus experienced utility
- Cognitive dissonance
- Conformity bias
- Prospect theory
- Representation bias
- Policy Maker's Perspective on Demonetization
- Real versus remembered utility
- Endowment effect
- Social proof
- Welfare Implications of Demonetization
- Future Goals and Career Aspirations
- Personal Experience of Shifting Cities
Demystifying Demonetization: A Perspective from a Young Indian
Demonetization is a topic that has sparked nationwide debate and discussion in India. In this article, we will Delve into the subject of demonetization from the perspective of a young Indian named Arnab. Arnab is a student of economics who recently completed his undergraduate studies from Christ University in Bangalore. He conducted research on demonetization from a behavioral economics standpoint, offering unique insights into how this major policy decision impacted both consumers and policy makers.
1. Introduction
Demonetization is a term that refers to the sudden withdrawal of certain currency notes from circulation by the government. In 2016, the Indian government announced the demonetization of high denomination notes of 500 rupees and 1,000 rupees, which accounted for the majority of currency in circulation at the time. The stated aim of this policy was to combat corruption, counterfeit currency, and move the country towards a cashless economy. However, the implementation and effects of demonetization had far-reaching implications that affected the lives of millions of Indians.
In this article, we will explore the experiences and perspectives of Arnab, a young Indian who has closely studied and researched the topic of demonetization. Through his insights, we will gain a deeper understanding of the impact of demonetization on Indian society, both from the lens of consumers and policy makers.
2. Background of the Interviewee
Arnab hails from Ranchi and completed his schooling from Ranchi University. He initially pursued a Commerce stream with mathematics, but his love for economics led him to shift his focus towards economics as a subject of study. After completing his 12th grade, Arnab joined Christ University in Bangalore to pursue his undergraduate studies in Economics Honors.
3. Choosing Christ University
When asked about the reason behind choosing Christ University, Arnab explained that he was passionate about economics and wanted to further explore the subject beyond the Core curriculum. Christ University offered a diverse range of subjects, including behavioral economics, agriculture economics, and international trade theory, which immediately appealed to Arnab. He saw this as an opportunity to gain a broader understanding of economics and discover his true potential in the field.
4. Experience at Christ University
Arnab thoroughly enjoyed his time at Christ University, where he pursued his undergraduate studies in Economics Honors. The university provided him with a platform to explore various subjects related to economics and expand his knowledge beyond traditional concepts. He had the opportunity to conduct research on different topics, including the relationship between financial inclusion and economic growth in India.
Arnab particularly appreciated the curriculum pattern at Christ University, which included continuous internal assessments in the form of short write-ups. This allowed him to delve deeper into specific topics and express his ideas using data and models. He also had the chance to intern at Tata and be a part of the Bangalore Bull's Market Analyst team, where he gained practical exposure to financial planning and data analysis.
5. Research Work on Demonetization
One of the notable research works undertaken by Arnab during his undergraduate studies was centered around demonetization. He examined demonetization from the lens of behavioral economics, seeking to understand the behavior of consumers during this period and the rationality behind their actions.
Arnab divided his research paper into two parts: the consumer's perspective and the policy maker's perspective. Through his research, he aimed to analyze the impact of demonetization on the public's Perception and decision-making process, as well as the effectiveness of the policies implemented by the government.
6. Consumer Perspective on Demonetization
Arnab explored various concepts from the field of behavioral economics to understand the consumer perspective on demonetization. Here are some of the key insights he gained from his research:
6.1 Decision utility versus experienced utility
Decision utility refers to the satisfaction individuals Seek from their choices, while experienced utility relates to the actual satisfaction obtained from those choices. Arnab noted a significant disparity between the two during demonetization, specifically due to an overestimation bias. The government successfully manipulated public perception by leading them to overestimate the long-term rewards of demonetization, such as moving towards a cashless society. However, the actual experienced utility fell short of these expectations.
6.2 Cognitive dissonance
Cognitive dissonance refers to the mental discomfort individuals experience when holding contradicting beliefs. During demonetization, people were forced to act against their beliefs, such as standing in long queues and adopting digital payment methods. This created a cognitive dissonance where their actions contradicted their prior beliefs, leading to internal conflict.
6.3 Conformity bias
Conformity bias refers to the tendency to change one's beliefs or behavior to fit in with others. The lack of Clarity and information provided by the government during demonetization led people to blindly follow the majority. People conformed to the societal norms and accepted the government's narrative without thoroughly evaluating the implications.
6.4 Prospect theory
Prospect theory suggests that individuals assign more weightage to losses than gains. During demonetization, the transition to a cashless economy was perceived as a loss, even though it was merely a change in asset holding. This aversion to change and the loss associated with it influenced people's behavior and resistance towards embracing digital transactions.
6.5 Representation bias
Representation bias refers to the tendency of individuals to remember and emphasize negative experiences more than positive ones. The negative aspects of demonetization, such as liquidity crunch and long queues, dominated public sentiment, overshadowing any potential positive outcomes. This bias further impacted the public's attitude towards the policy.
7. Policy Maker's Perspective on Demonetization
Arnab also examined demonetization from the perspective of policy makers, particularly focusing on the welfare implications and the use of behavioral economics techniques. Here are some of the key insights from this analysis:
7.1 Real versus remembered utility
While the remembered utility of demonetization was perceived as positive, with long-term benefits such as the move towards a cashless economy, the real-time utility experienced by individuals during demonetization was negative. This disparity between perception and reality further influenced public sentiment towards the policy.
7.2 Endowment effect
The endowment effect states that individuals attribute more value to something they possess compared to an identical item they do not possess. During demonetization, people viewed their cash holdings as a prized possession and experienced temporary discomfort due to the need to deposit or exchange their money. This psychological attachment to their cash holdings influenced their resistance to the policy.
7.3 Social proof
Policy makers could have employed behavioral economics techniques, such as social proof and framing, to influence public perception and garner support for demonetization. By highlighting the positive aspects and long-term benefits of tax compliance and a cashless economy, the government could have framed the policy in a more favorable light. This use of social proofs would have helped the citizens perceive the tax system as fair and beneficial for the country.
8. Welfare Implications of Demonetization
Arnab's research also touched upon the welfare implications of demonetization. He observed that while the government aimed to redirect money towards welfare schemes and promote economic development, the implementation of demonetization targeted a large group of economic agents. As money was pumped into the welfare schemes, many individuals faced liquidity crises, impacting their welfare and well-being. There was a mismatch between the government's intentions and the actual welfare outcomes.
9. Future Goals and Career Aspirations
Looking ahead, Arnab's short-term goal is to contribute to the job market in India. As the placement coordinator at his university, he aims to make a significant impact on the availability of job opportunities for students. In the long term, Arnab aspires to join the Reserve Bank of India (RBI) either through the RBI Grade B exam or the Economic Services exam. He wants to directly contribute to the welfare of his nation and utilize his knowledge and passion for economics to make a difference.
10. Personal Experience of Shifting Cities
Arnab shared his personal experience of shifting cities multiple times, from Ranchi to Bangalore and then to Delhi. He Mentioned that each city had its own unique characteristics and cultural differences. Ranchi was a quiet and relaxed city, while Bangalore was fast-paced and bustling with a student-dominated crowd. Delhi offered historical monuments, affordable living, and a student-friendly atmosphere. However, he also acknowledged the pollution and extreme weather conditions in Delhi as challenges to overcome.
Conclusion
Arnab's research and insights shed light on the complexities of demonetization from a behavioral economics perspective. He explored the impact of demonetization on consumers' decision-making processes and policy makers' responses, highlighting key biases and perceptions that influenced the outcome. Furthermore, Arnab shared his personal experiences and aspirations, demonstrating the passion and drive of young Indians like him to contribute to the welfare of their nation through their expertise in economics. Overall, this article offers a comprehensive perspective on demonetization in India and encourages readers to delve deeper into this multifaceted topic.
Highlights:
- Demonetization is a major policy decision that sparked widespread debate in India.
- Arnab, a young Indian, conducted research on demonetization from a behavioral economics standpoint.
- He explored the impact of demonetization on consumers' decision-making and policy makers' responses.
- Key insights include the disparity between decision utility and experienced utility, cognitive dissonance, conformity bias, prospect theory, and representation bias.
- Policy makers could have employed techniques like social proof to Shape public perception.
- Demonetization had significant welfare implications, targeting a large group of economic agents and impacting their well-being.
- Arnab aspires to join the Reserve Bank of India and contribute to the nation's welfare through his knowledge of economics.
- Personal experiences of shifting cities highlight the cultural differences and challenges faced.
FAQ:
Q1. What is demonetization?
A1. Demonetization is the process of withdrawing certain currency notes from circulation by the government. It aims to combat corruption, counterfeit currency, and promote a cashless economy.
Q2. What were the key findings from Arnab's research on demonetization?
A2. Arnab's research highlighted various behavioral economics concepts, such as the disparity between decision utility and experienced utility, cognitive dissonance, conformity bias, prospect theory, and representation bias. These factors influenced both consumers and policy makers during demonetization.
Q3. How did demonetization impact the welfare of individuals in India?
A3. The implementation of demonetization had welfare implications, as many individuals faced liquidity crises, impacting their well-being. There was a mismatch between the government's intentions and the actual welfare outcomes.
Q4. What are Arnab's career aspirations?
A4. Arnab aims to contribute to the job market in India in the short term and aspires to join the Reserve Bank of India (RBI) in the long term, utilizing his knowledge and passion for economics to make a difference.
Q5. What were Arnab's personal experiences in shifting cities?
A5. Arnab shared his experiences of shifting from Ranchi to Bangalore and then to Delhi. Each city had its own unique characteristics and cultural differences, offering different opportunities and challenges.
[Note: The content of this article is Based on the interviews and research conducted by Arnab, a young Indian student. The opinions expressed are his own and do not represent the views of all individuals or institutions.]
