Caste in Stone

787/2026 Karla Hoff and Priyanka Pandey

This paper applies the economics of identity to caste. It briefly explains the history of the caste system in India. Then it draws on experimental and empirical work to identify some of the ways that caste identities affect behavior and aggregate outcomes—through coordination failures, stereotype threat, (lack of) solidarity, the marriage market, empathy, and backlash to affirmative action. Caste identities have a large impact in limiting the reach of government services. Identifying the effects of caste on behavior gives policy makers new ways to change behavior by reducing the social distance between castes. Creating opportunities for high- and low-caste individuals to collaborate nearly as equals lowered teacher absenteeism rates in public primary schools and reduced caste discrimination. Interventions to reduce the social distance between groups are outside of the toolbox of standard economics, but may one day be mainstream in the economics of identity.

Designing and Building Institutions.