Infatuation with being Rural

February 23, 2024

The reluctance to shift from the status quo, especially when it seems beneficial in the short term despite potential long-term detriments, is a well-documented bias in behavioural economics deeply rooted in human psychology. Daniel Kahneman and Amos Tversky’s Prospect Theory illustrates this by suggesting that people value gains and losses differently, with the pain of losses often outweighing the satisfaction of equivalent gains. This leads to a preference for avoiding losses, a tendency that is compounded by the endowment effect, where individuals value what they already possess more highly than what they might gain. The concept of temporal discounting further explains this resistance to change, as people tend to prioritize immediate rewards over future benefits, even when the latter are significantly greater. Philosophical perspectives, like John Stuart Mill’s utilitarianism, suggest that this bias can lead to decisions that do not maximize overall happiness or welfare, emphasizing the complexity of human decision-making beyond mere economic calculations.

In the context of India, this behavioral bias manifests in the reluctance of both state governments and residents of rural areas to reclassify as urban. The immediate benefits of maintaining a rural designation, such as eligibility for various government schemes and subsidies intended to support rural development, provide a strong incentive to resist change. These benefits are perceived as more valuable in the short term, despite the potential long-term advantages of urban classification, such as improved infrastructure and economic opportunities.