Skip to main content
SpringerLink
Log in

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

  • Original Paper
  • Published:
Economics of Governance Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. At the time of the survey, most Indian states had yet to unbundle their SEB or had done so only recently. Therefore, we discuss experiences with the power utilities in terms of the SEB, as opposed to generation, transmission, and distribution companies.

  2. “Bihar’s Industrial Town to Protest against Power Shortage.” Available at http://www.rediff.com/money/report/bihars-industrial-town-to-protest-against-power-shortage/20120525.htm.

  3. The survey covered Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal.

  4. Dubin and Rivers (1989) provide a thorough extension of the Heckman model by applying logit and probit models in the outcome stage when the dependent variable of interest is a binary variable (e.g. vote for Reagan in the presidential election). In line with our work, they also argue that turnout and voting behavior should be analyzed jointly by taking sample selection mechanism into account. To be noted, Dubin and Rivers find largely identical results from probit estimation and the original bivariate normal estimation (i.e. a linear probability model).

  5. In the appendix, we use the principal component analysis to construct an alternative measure of household assets. The principal component analysis includes the same 13 items. We then use the principal scores that account for the greatest variation in the analysis and find the same results. In fact, the principal component scores are highly correlated with our original measure of household assets (\(r = 0.971\), significant at the \(\alpha < 0.001\) level).

  6. The original survey included respondents who were below the age of 10; we exclude them so that only adults are included in our analysis.

References

  • Aklin M, Bayer P, Harish SP (2014) Information and energy policy preferences: a survey experiment on public opinion about electricity pricing reform in rural India. Econ Gov 15(4):305–327

    Article  Google Scholar 

  • Badiani R, Jessoe KK, Plant S (2012) Development and the environment: the implications of agricultural electricity subsidies in India. J Environ Dev 21(2):244–262

    Article  Google Scholar 

  • Baker A (2003) Why is trade reform so popular in Latin America? A consumption-based theory of trade policy preferences. World Polit 55(3):423–455

    Article  Google Scholar 

  • Baskaran T, Min B, Uppal Y (2015) Election cycles and electricity provision: evidence from a quasi-experiment with Indian special elections. J Public Econ 126:64–73

    Article  Google Scholar 

  • Behr RL, Iyengar S (1985) Television news, real-world cues, and changes in the public agenda. Public Opin Q 49(1):38–51

    Article  Google Scholar 

  • Berinsky AJ, Tucker JA (2006) Don’t knows’ and public opinion towards economic reform: evidence from Russia. Communist Post-Communist Stud 39(1):73–99

    Article  Google Scholar 

  • Bhattacharya S, Patel UR (2007) The power sector in India: an inquiry into the efficacy of the reform process. India Policy Forum 4(1):211–283

    Google Scholar 

  • Bhattacharyya SC (2005) The Electricity Act 2003: Will it transform the Indian power sector? Util Policy 13(3):260–272

    Article  Google Scholar 

  • Bimber B (2001) Information and political engagement in America: the search for effects of information technology at the individual level. Political Res Q 54(1):53–67

    Article  Google Scholar 

  • Buendía J (1996) Economic reform, public opinion, and presidential approval in Mexico, 1988–1993. Comp Political Stud 29(5):566–591

    Article  Google Scholar 

  • Bussell JL (2010) Why get technical? Corruption and the politics of public service reform in the Indian states. Comp Political Stud 43(10):1230–1257

    Article  Google Scholar 

  • Chatterjee Elizabeth (2012) Dissipated energy: Indian electric power and the politics of blame. Contemp South Asia 20(1):91–103

    Article  Google Scholar 

  • Chhibber P, Eldersveld S (2000) Local elites and popular support for economic reform in China and India. Comp Political Stud 33(3):350–373

    Article  Google Scholar 

  • Denisova I, Eller M, Frye T, Zhuravskaya E (2012) Everyone hates privatization, but why? Survey evidence from 28 post-communist countries. J Comp Econ 40(1):44–61

    Article  Google Scholar 

  • Downs A (1957) An economic theory of democracy. Harper, New York

    Google Scholar 

  • Drèze J, Sen AK (2002) India: development and participation, 2nd edn. Oxford University Press, New York

    Book  Google Scholar 

  • Dubash NK, Rajan SC (2001) Power politics: process of power sector reform in India. Econ Political Wkly 36:3367–3390

    Google Scholar 

  • Dubin JA, Rivers D (1989) Selection bias in linear regression, logit and probit models. Sociol Methods Res 18(2/&3):360–390

    Article  Google Scholar 

  • Fernandez R, Rodrik D (1991) Resistance to reform: status quo bias in the presence of individual-specific uncertainty. Am Econ Rev 81(5):1146–1155

    Google Scholar 

  • Gavin NT, Sanders D, Farrall N (1996) The impact of television economic news on public perceptions of the economy and government, 1993–94. Br Elections Parties Yearb 6(1):68–84

    Article  Google Scholar 

  • Government of India (2002) Annual report (2001–02) on the working of state electricity boards & electricity departments. Planning Commission (Power & Energy Division). http://planningcommission.nic.in/reports/genrep/seb/ar_seb02.pdf

  • Government of India (2011a) 2011 Census report, houselisting and housing census data highlights. http://www.censusindia.gov.in/2011census/hlo/hlo_highlights.html

  • Government of India (2011b) Annual report (2011–12) on the working of state electricity boards & electricity departments. Planning Commission (Power & Energy Division). http://planningcommission.gov.in/reports/genrep/arep_seb11_12.pdf

  • Government of India (2013) State distribution utilities: first annual integrated rating. Ministry of Power. http://powermin.nic.in/whats_new/pdf/full_n_final_set_Rating_booklet_Mar2013.pdf

  • Hall D, Lobina E, de la Motte R (2005) Public resistance to privatisation in water and energy. Dev Pract 15(3–4):286–301

    Article  Google Scholar 

  • Heckman JJ (1979) Sample selection bias as a specification error. Econometrica 47(1):153–161

    Article  Google Scholar 

  • Jenkins R (1999) Democratic politics and economic reform in India. Cambridge University Press, New York

    Google Scholar 

  • Jensen R, Oster E (2009) The power of TV: cable television and women’s status in India. Q J Econ 124(3):1057–1094

    Article  Google Scholar 

  • Joseph KL (2010) The politics of power: electricity reform in India. Energy Policy 38(1):503–511

    Article  Google Scholar 

  • Kale SS (2004) Current reforms: the politics of policy change in India’s electricity sector. Pac Aff 77(3):467–491

    Google Scholar 

  • Kannan KP, Vijayamohanan Pillai N (2001) Plight of power sector in India I: physical performance of SEBs. Econ Political Wkly 36(2):130–139

    Google Scholar 

  • Lal S (2006) Can good economics ever be good politics? Case study of India’s power sector. World Bank working paper 83

  • Lupia A, McCubbins MD (1998) The democratic dilemma: Can citizens learn what they need to know?. Cambridge University Press, New York

    Google Scholar 

  • Martinelli C (2006) Would rational voters acquire costly information? J Econ Theory 129(1):225–251

    Article  Google Scholar 

  • Meher S, Sahu A (2013) Power sector reform and pricing of electricity: the Odisha experience. J Asian Afr Stud 48(4):447–468

    Article  Google Scholar 

  • Min B, Golden M (2014) Electoral cycles in electricity losses in India. Energy Policy 65:619–625

    Article  Google Scholar 

  • Omvedt G (2009) Social movements and democracy: the challenges of the anti-caste movement. In: Basrur RM (ed) Challenges to democracy in India. Oxford University Press, New York

    Google Scholar 

  • Purkayastha P (2003) Power sector policies and new electricity bill: from crisis to disaster. Econ Political Wkly 36(25):2257–2262

    Google Scholar 

  • Santhakumar V (2003) Impact of distribution of costs and benefits of non-reform: case study of power sector reforms in Kerala between 1996 and 2000. Econ Political Wkly 38(2):147–154

    Google Scholar 

  • Santhakumar V (2008) Analysing social opposition to reforms: the electricity sector in India. Sage, Thousand Oaks

    Google Scholar 

  • Sattler T, Urpelainen J (2012) Explaining public support for international integration: How do national conditions and treaty characteristics interact with individual beliefs? J Polit 74(4):1108–1124

    Article  Google Scholar 

  • Shah T, Scott C, Kishore A, Sharma A (2004) Energy-irrigation nexus in South Asia: improving groundwater conservation and power sector viability. International Water Management Institute, Research report 70, Revised Second Edition

  • Singh P (2013) Public good provision and social development in India. In: Kohli A, Singh P (eds) Routledge handbook of indian politics. Routledge, Abingdon

    Google Scholar 

  • Sniderman P, Brody RA, Tetlock P (1991) Reasoning and choice: explorations in political psychology. Cambridge University Press, New York

    Book  Google Scholar 

  • Stigler GJ (1971) The theory of economic regulation. Bell J Econ Manag Sci 2(1):3–21

    Article  Google Scholar 

  • Stokes SC (1996) Public opinion and market reforms: the limits of economic voting. Comp Political Stud 29(5):499–519

    Article  Google Scholar 

  • Thompson L, Elling RC (2000) Mapping patterns of support for privatization in the mass public: the case of Michigan. Public Adm Rev 60(4):338–348

    Article  Google Scholar 

  • Tripta T, Deshmukh SG, Kaushik SC, Kulshrestha M (2005) Impact assessment of the Electricity Act 2003 on the Indian power sector. Energy Policy 33(9):1187–1198

    Article  Google Scholar 

  • Urban F, Benders RMJ, Moll HC (2009) Energy for rural India. Appl Energy 86(S1):S47–S57

    Article  Google Scholar 

  • Varma S (1997) Women’s struggle for political space: from enfranchisement to participation. Rawat Publications, Jaipur

    Google Scholar 

  • Varshney A (1998) Mass politics or elite politics? India’s economic reforms in comparative perspective. J Policy Reform 2(4):301–335

    Article  Google Scholar 

  • Verba S, Burns N, Schlozman KL (1997) Knowing and caring about politics: gender and political engagement. J Polit 59(4):1051–1072

    Article  Google Scholar 

  • Zaller JR (1992) The nature and origins of public opinion. Cambridge University Press, New York

    Book  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of California, Los Angeles, CA, USA

    Chao-yo Cheng

  2. Columbia University, 420 West 118th Street, 712 International Affairs Building, New York, NY, 10027, USA

    Johannes Urpelainen

Authors
  1. Chao-yo Cheng
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Johannes Urpelainen
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Johannes Urpelainen.

Additional information

We thank V. Santhakumar for generously sharing his data. We are grateful to Paul Anthony Arias, Patrick Bayer, Michaël Aklin, Michael Presky, V. Santhakumar, Thomas Sattler, and the participants at the 2014 annual meeting of the Midwest Political Science Association for useful comments.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (pdf 490 KB)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Cheng, Cy., Urpelainen, J. Unawareness and indifference to economic reform among the public: evidence from India’s power sector reform. Econ Gov 17, 211–239 (2016). https://doi.org/10.1007/s10101-015-0179-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10101-015-0179-4

Keywords

Search

Navigation