Unawareness and indifference to economic reform among the public: evidence from India’s power sector reform

Cheng, Chao-Yo and Urpelainen, J. (2016) Unawareness and indifference to economic reform among the public: evidence from India’s power sector reform. Economics of Governance 17 (3), pp. 211-239. ISSN 1435-6104.

Abstract

Although economic reform generates winners and losers, many people have no opinion whatsoever about it. Because most empirical research ignores these non-responses, the conventional wisdom on the determinants of support for economic reform ignores large groups of silent citizens. To correct this problem, we present a stylized model that accounts for support, opposition, indifference, and unawareness about reform. We argue that informed people and those who perceive the status quo as dysfunctional will form an opinion more readily than others. For evidence, we examine public opinion about electricity privatization from a large field survey in rural India. We find that information and perceived inefficiency have much larger effects on the likelihood of forming an opinion than on the direction of that opinion (yes or no), emphasizing the importance of accounting for opinion formation process. In this case, information and perceived inefficiency make reform a salient issue to a passive public, most of whom become vocal opponents of reform.

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