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¡®Arranged¡¯ Marriage, Education, and Dowry: A Contract-theoretic Perspective

Soumyanetra Munshi ()
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Soumyanetra Munshi: Indian Statistical Institute, Economic Research Unit

Journal of Economic Development, 2017, vol. 42, issue 1, 35-71

Abstract: This paper propounds a contract-theoretic model that addresses the empirically observed conundrum of increased education of the groom being associated with increased dowry transactions. Unlike the human capital approach, we impart a signaling role to education whereby education signals unobservable qualities of the groom that are valuable to the bride. In ¡®arranged¡¯ marriage settings that are characterized by incomplete information in the sense that the true quality of the groom remains unobservable to the bride, and in the presence of observable traits like education that are easier for the better quality groom to achieve, education-dowry contracts can potentially serve as a screening instrument to differentiate grooms of varying qualities. In equilibrium, different types of grooms select different education-dowry contracts, with better types being associated with both higher education and higher dowry. Hence the model has interesting and important policy implications since it means that increased public expenditure on education may actually be forcing dowry levels to rise. The paper also discusses historical and narrative evidences in support of its main hypotheses.This paper propounds a contract-theoretic model that addresses the empirically observed conundrum of increased education of the groom being associated with increased dowry transactions. Unlike the human capital approach, we impart a signaling role to education whereby education signals unobservable qualities of the groom that are valuable to the bride. In ¡®arranged¡¯ marriage settings that are characterized by incomplete information in the sense that the true quality of the groom remains unobservable to the bride, and in the presence of observable traits like education that are easier for the better quality groom to achieve, education-dowry contracts can potentially serve as a screening instrument to differentiate grooms of varying qualities. In equilibrium, different types of grooms select different education-dowry contracts, with better types being associated with both higher education and higher dowry. Hence the model has interesting and important policy implications since it means that increased public expenditure on education may actually be forcing dowry levels to rise. The paper also discusses historical and narrative evidences in support of its main hypotheses.

Keywords: ¡®Arranged¡¯ Marriage; Dowry; Dowry Inflation; Dowry and Education; Dowry as a Screening Device; Dowry as a Signal of the Quality of the Groom (search for similar items in EconPapers)
JEL-codes: J12 J16 D10 (search for similar items in EconPapers)
Date: 2017
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