Behavioral Economics of Trade by the Himalayan Mountain Women

NE Now, August 05, 2021

By Apoorva Lalwani and Veena Vidyadharan

Mountain societies are one of the most isolated ones. Inaccessibility of remote and rugged locations is a key feature. This has led mountain people to be one of the most deprived sections of our society. The Hindu Kush Himalayan (HKH) region is no exception and faces the brunt of climate crises.

The HKH region embraces four trans-boundary landscapes (Kailash Sacred Landscape, Kangchenjunga Landscape, Pamir Karakoram Landscape and Far Eastern Himalayan Landscape) and eight countries (Bhutan, India, China, Nepal, Myanmar, Afghanistan, Pakistan and Tajikistan).

These four landscapes have some common attributes. Historically, mountain people have remained marginalised politically, economically and socially as compared to those in the main lowlands. Furthermore, the mountain areas show similar patterns in resource management, use of factors of production and even social organisation.

Mountain societies, however, are patriarchal at their core in terms of access, transfer and control of assets. Due to seclusion from the mainland, they have less rigid social structures, role and hierarchies. Additionally, indigenous beliefs gave more dominance to women in the livelihood system as compared to societies in the lowlands.

They could afford more freedom in movement and decision making. Also, traditionally mountain women played a crucial role in natural resource management, production, domestic caregiving and rearing children.

However, degrading environment, increased risk of calamities and depleting agricultural produce have made mountain people more vulnerable to shocks. This has forced them to migrate, primarily men, to lowlands in search of better livelihoods.

This out-migration has highly affected the women folks in the HKH, making them more vulnerable to any kind of vulnerabilities be it climatic, geopolitical or any other.

This out-migration and resultant exposure to lowlands have affected mountain women in more than one ways. First, it has increased household burden and other work on mountain women.

Secondly, it is slowly eroding the egalitarianism in gender relations in the mountains due to higher influence of lowlands. An influx of new values, which puts more worth on cash earning capabilities, is bearing a negative consequence on women.

In this context and in light of myriad of other issues faced by mountain women, CUTS International has recently conducted a study titled ‘Strengthening the Role of Women in the Transboundary Landscapes of the Hindu Kush Himalayan Region: Building resilience to shocks and vulnerabilities’ covering those four trans-boundary landscapes in the HKH region. It was supported by the International Centre for Integrated Mountain development (ICIMOD) – an inter-governmental organisation.

It aimed at understanding the formal and informal trade happening in those trans-boundary landscapes and about the engagement of women thereby facilitating and further strengthening women’s role in trade both in terms of access and benefit.

It has come out with a number of revealing findings. For example, based on analysis of field data from Sikkim state in the Kangchenjunga Landscape, the study not just revalidated the social and economic organisation of women in the Kangchenjunga Landscape but also elicited behavioral aspects of women entrepreneurs in conducting business.

It has been found that despite being more egalitarian in nature as compared to the rest of India, the role of women is still restricted to production activities. Any form of trade, local, national, cross border or international, is conducted by men. This leaves women with lesser access and control over cash.

One of the major behavioral biases highlighted in the study was the status quo bias. It is a cognitive bias, a preference for the current state and reluctance for any kind of change.

The primary reason for this bias is that the population of Sikkim is very low; thus, there is limited competition and variety in products. Also, almost every household in Sikkim has one member in government job. This increases the inertia among women entrepreneurs who have an alternate steady stream of income.

Secondly, with inadequate access to cash and lack of collateral among women (due to traditional patriarchal set up) women are risk averse in taking loans from banks or have an increased risk perception for bank loans.

Risk aversion is another cognitive bias where a subject prefers less uncertain option vis-a-vis a higher uncertain option even if the average return for the latter is higher or equal than the former.

Hence, due to lack of resources the production capacity of the state has remained low resulting in inadequate value chains even for major cash crops such as large cardamom and ginger.

Our analysis brings out another behavioral bias among women entrepreneurs, which is the intent- action gap. The intent-action gap occurs when a subject has all the intentions of doing/performing a certain task but fails to follow through.

This behavioral bias is shown by women entrepreneurs who want to expand the outreach of their business by leveraging social media but fail to do so. On interviewing them, they expressed their interest in using online platforms and digital financial applications for transactions but unable to so do due lack of understanding of their applications.

The study brought out the importance of education among mountain women and their entrepreneurial activities. Younger and more educated women entrepreneurs are venturing into more diverse kinds of business, adopting newer techniques in traditional activities and exploring ways of increasing the outreach of their products. Hence, education plays a major role in making subjects more aware and eventually battling the aforementioned behavioral biases.

Finally, the women entrepreneurs in rugged and remote mountain locations face numerous infrastructural inadequacies in respect to transportation, internet services and climatic shocks, among others, while conducting trade. But it is an imperative to look at their decisions from the lens of behavioral economics in order to nudge them to become better decision makers. Further research to propose relevant interventions to overcome behavioral biases will not be just cost effective but also a ‘rational’ next step.

Apoorva Lalwani is research associate, CUTS International, a global public policy think- and action-tank on trade, regulations and governance. Veena Vidyadharan is fellow at CUTS International.

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