Meet Our Researchers: Dr. Saumitra Jha
Meet Our Researchers: Dr. Saumitra Jha
Exploring the unifying potential of economics against intolerance, polarization, and violence with Associate Professor of Political Economy Saumitra Jha.
This "Meet Our Researchers" series showcases the incredible scholars at Stanford’s Center on Democracy, Development and the Rule of Law (CDDRL). Through engaging interviews conducted by our undergraduate research assistants, we explore the journeys, passions, and insights of CDDRL’s faculty and researchers.
Dr. Saumitra Jha is a Senior Fellow and Dan C. Chung Faculty Scholar at the Freeman Spogli Institute for International Studies and a Senior Fellow at the Stanford Institute for Economic Policy Research. He also is an Associate Professor of Political Economy at the Stanford Graduate School of Business and an Associate Professor, by courtesy, of Economics and of Political Science. His research examines the effects of financial markets on the development of trust and inter-ethnic peace, with a focus on South Asia’s political economy. Dr. Jha’s work has been featured in journals including Econometrica, the Quarterly Journal of Economics, the American Political Science Review, and the Journal of Development Economics.
What inspired you to pursue research in your current field, and how did your journey lead you to CDDRL?
Growing up during the fall of the Berlin Wall, the future seemed bright, and we felt that we could solve the world’s problems. At the same time, moving from Scotland to India, I witnessed severe religious rioting and conflict in even the richest parts of the country, making me wonder why such conflict existed amidst increased wealth and modernization. While finance can seem like a zero-sum game, I believe it has great potential for bringing people together and solving developmental problems. Eventually becoming an economist, I wondered how one can use economic ideas to reduce conflict and help build reforms that benefit society.
I’ve always admired CDDRL, having attended their seminars while a PhD student at Stanford. I love the community; the question of how to solve issues of democracy, development, and the rule of law is closest to my heart, and it’s nice to be among those who feel the same.
How closely does economic development correlate with increased tolerance of different identities, and what economic incentives are most effective at improving group unity?
Originally, I expected the correlation between wealth and tolerance to be much stronger than it actually is. I thought that wealth would lead to people being less likely to engage in violence and that resource scarcity among poor societies would primarily cause conflict. However, even as countries grow rich, conflicts rage on.
If we get the incentives right, we can leverage the gains from economic development to solve broad societal issues. One challenge is the ‘ethnic diversity trap,’ a concept that I’m investigating for the research initiative ReCIPE, which is about how more societal diversity correlates with more conflict. I believe there are ways to break this trap using trade and financial ideas.
To what extent do factors of identity affect economic behavior? How often are people making business decisions that favor their community or identity group instead of those that are most economically beneficial to themselves?
As economists, the way we model the world is all about self-interest. Still, a striking number of people will make sociotropic decisions, which means that even if a choice doesn’t benefit them personally, they do so because they believe it’s good for society.
Having studied the history of Hindu-Muslim tolerance, there were some situations where Muslim traders were viewed as competition by Hindus, but other cases where a robust sense of complementarity emerged. The Hajj pilgrimage developed one of the largest markets in the world and created an expansive Muslim-specific advantage in trade; to gain access to this market, some Hindus were incentivized to collaborate with Muslims and make the Islamic minority feel welcome in India. Even when that initial trade incentive went away, institutions of trust between the communities remained. Visiting those Indian port towns today, it’s uplifting to see that enduring legacy of tolerance continue.
What is the most exciting or impactful finding from your research, and why do you think it matters for democracy, development, or the rule of law?
One stream of my research is about how financial systems have been historically used to solve problems of conflict and polarization and how they can be employed today. Three post-revolutionary countries that would go on to lead in GDP growth — 17th century England, 18th century United States, and 19th century Japan — all had financial revolutions preceding their economic development. Furthermore, in the last two cases, they were intentionally designed to integrate groups that were likely to engage in conflict with each other, bringing about peace and stability that other countries couldn’t parallel. For example, Japanese reformers gave the Samurai bonds to incentivize them to enter banking rather than fight to maintain their caste privileges.
Learning from history, how can economics be used today to deepen societal cooperation and trust? Through field experiments, we investigate how providing people with shares and the ability to trade in the stock market affects their political attitudes. This inclusion in financial markets can make people more supportive of ideas like peace in the Israel-Palestine conflict or economic integration during Brexit. In the US, evidence suggests that giving people green stocks motivates decreased skepticism about climate change and drives support for climate-friendly policy. Economies where people can participate and benefit together will likely be more sustainable in the long run, having desirable outcomes for broader society.
How do you see your research influencing policy or contributing to real-world change?
We need ways to help people learn and be empowered to participate in financial markets through experiential learning. We are using platforms to help people trade small amounts in markets, which is eminently scalable. Market participation has beneficial effects on people’s willingness to understand policies and follow more reputable media sources like the Financial Times with less partisanship. It can increase people’s financial literacy, confidence, and societal trust. However, it needs to be done carefully — I don’t think exposing people to a financial market casino is necessarily helpful, but through intentionality and design, increased involvement in markets has powerful implications on the ways people process and think about the world.
What gaps need to be addressed in your research field, and what do you anticipate will be studied in the future?
The conditions in which nonviolent movements can succeed or fail is a topic that is not well understood, so I’m writing a book about it. Nonviolence is very constrained in what it’s able to do and can only work under specific conditions. Some say it’s limitless, but it's very limited, as nonviolent movements are giving up a whole set of strategies that violent movements have. I believe nonviolence can be effective, but only under specific conditions.
I’m also interested in what we’re calling “Apex corruption,” which is when focal individuals such as top politicians are implicated in corruption. Can that change people’s behaviors, making them act more corrupt themselves, and does it affect their perceptions of democracy? Unfortunately, we are finding evidence that it does, but this also provides an opportunity, as it suggests that individuals being honest at the top can change the way we coordinate societies regarding corruption.
This relates to another question I’m focused on — under what conditions can non-elites have the agency to change society for the better? Often, research focuses on deep economic and political forces, but there are conditions under which individuals can make a difference, too.
Lastly, what book would you recommend for students interested in a research career in your field?
There are two books that I recommend that provide different but complementary perspectives. The first is by John McMillan, a former colleague of mine at the GSB, called Reinventing the Bazaar. It’s about how economic thinking and design can have practical impacts in both developing and developed countries. Second is Banerjee and Duflo’s book, Good Economics for Hard Times, which summarizes recent research on the world and how economics can help us understand it better.
