Research in Economics 58 (2004) 235255 www.elsevier.

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A hedonic analysis of marriage transactions in India: estimating determinants of dowries and demand for groom characteristics in marriage
Sonia Dalmia*
Department of Economics, Seidman College of Business, Grand Valley State University, 476C DeVos Center, 401 West Fulton Street, Grand Rapids, MI 49504, USA Received 15 July 2002; accepted 1 March 2004

Abstract This paper uses data from a retrospective sample survey to develop and test a framework capable of explaining dowry exchange and groom selection in India. It adapts Rosens implicit market model and nds support for the hypothesized, equalizing differences, role of marital arrangements for uneducated brides in India. The measurable groom characteristics on which price differentials arise empirically include grooms age at marriage, education and height. Consistent with ethnographic evidence, results indicate that dowries are higher in regions more to the north. Most importantly, contrary to popular belief, it is found that holding groom characteristics constant, real dowries have decreased over time. Furthermore, results reveal that the most important determinants of demand for various groom attributes are price of the attribute, brides traits, and the socio-economic status of the brides household. q 2004 University of Venice. Published by Elsevier Ltd. All rights reserved.
Keywords: Dowry; Marriage; Hedonic; Demand; India

1. Introduction Over the last ve decades, two changes of importance with respect to marriage payments have been observed in India. These include the near universal adoption of dowry (the transfer from brides and their families to grooms and their families) as a condition of marriage, and a secular increase in the real value of these transfers. Researchers have
* Tel.: 1-616-331-7423; fax: 1-616-331-7445. E-mail address: dalmias@gvsu.edu 1090-9443/$ - see front matter q 2004 University of Venice. Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.rie.2004.03.002

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attributed these trends to an excess supply of women at marriageable ages, which results from population growth when women marry older men, a phenomenon often referred to as marriage squeeze in the demographic literature (Caldwell et al., 1983; Billig, 1992; Rao, 1993a,b; Bhat and Halli, 1999). While there is a growing body of literature on the rising real value of dowries in India, systematic evidence to support it is both unclear and limited (Rao, 1993a,b; Edlund, 2000, 2001; Anderson, 2000, 2003). Rao (1993a,b) was the rst to introduce and document empirical evidence in favor of the marriage squeeze argument to economists.1 Using data on 141 households over the period 1923 1978 from six villages in south-central India, Rao showed that dowry payments rise to clear the marriage market when grooms are relatively in short supply. Raos results, however, could not be replicated by Edlund (2000) who reexamined his work using the same data. She argues that the rise in real dowries resulted from larger premortem bequests to daughters due to an increase in parental wealth rather than a surplus of women in the marriage market.2 However, brides household wealth is an insignicant determinant of dowry payments in her regression, suggesting that there is no statistical evidence to support that dowry ination is only a wealth effect (see also Rao, 2000). In addition, Anderson (2000) has shown that the theory that recognizes dowry ination as a price for scarce grooms is untenable when modeled in a dynamic framework. According to her, the marriage squeeze argument only works if unmarried brides do not re-enter the marriage market. That is, if they never marry. However, as long as women who do not nd matches re-enter the marriage market as older brides, Andersons theoretical model reveals that an excess supply of brides can only lead to declining dowry payments, thus casting further doubt on marriage squeeze as an explanation for dowry ination in India. Although, the severe social consequences of rising dowries have motivated a large body of research over the last two decades aimed at explaining the phenomenon, there is a relative paucity of formal studies systematically analyzing the role of dowry in India. This paper makes a contribution in that direction, by examining the role of dowry within the framework of economic thought using a different and larger data set than Rao on marriage transactions and on the individual and family traits of marital partners from a retrospective survey in rural north and south India. The practice of dowry in India has been theoretically linked to a number of factors. These include the nature of the inheritance system and the residence of the bride after marriage (Botticini and Siow, 2003), kinship organizations (Dyson and Moore, 1983; Trautmann, 1993), monogamy (Tertilt, 2003), womens role in production (Boserup, 1970), social stratication in society (Goody, 1973), and the demographic availability of potential spouses (Caldwell et al., 1983; Becker, 1991). None of these factors, however, completely or sufciently explain why dowry occurs where and when it does. Moreover, apart from Raos work on rising dowries, there are no studiesanthropological, demographic,
See Epstein (1973), Srinivas (1984), Paul (1986) and Upadhya (1990) in the sociological literature. In the same vein, Anderson (2000) argues, theoretically, that in caste based societies, such as India, increases in dowry payments are a consequence of higher wealth heterogeneity that accompanies modernization.
2 1

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sociological or economicthat have empirically examined these hypotheses with data on dowries from India. By using a sample of 1037 households between 1956 and 1994, this paper develops and tests a framework capable of explaining marriage transactions and groom selection in India. It adapts Rosens (1974) implicit market model and takes the view that dowry is a simple economic transaction that functions to equalize the value of marriage services exchanged by the households of the bride and groom. In other words, it proposes that it is the combination of traits of the groom, the bride, and their respective households that constitutes the relevant price of a match. The set of dowries and the measurable attributes and characteristics associated with all such matches are the equalizing differences observed in the market. Dowry is then the price of a good match in the marriage market. In the empirical investigation of marriage markets, one issue of interest is determining how the price of a match varies with the characteristics of the bride and the groom. The other subject of interest is estimating structural demand functions for making inferences about preferences from observed marriage transaction data. A potential benet of estimating demand parameters is that the price-quantity relationship can be used to evaluate the adequacy and reliability of Rosens (1974) implicit market model in valuing the attributes of potential participants in the marriage market, and hence examining the role of dowries in India. But the absence of directly observable attribute prices poses a problem for such estimation. In a seminal essay, Rosen (1974) proposed a two-step procedure whereby attribute prices are estimated rst as derivatives of a hedonic price function and these are then used to predict the parameters of household demand functions for attributes. Despite the frequent use of Rosens (1974) modeling strategy, applications have often used inappropriate estimation procedures that give rise to inconsistent estimates of the parameters of demand functions. A review of related research on dowry reveals that all studies have conducted a single-stage hedonic analysis of marriage markets. As a result these issues have not received much attention from researchers (Rao, 1993a,b; Botticini, 1999). In the estimation procedure suggested by Rosen, the interaction of individual supply and individual demand produces a market clearing function that relates the price of a match to the bundle of characteristics provided by the bride and groom. This creates an identication problem of separating the parameters of preference from those of the hedonic price function. Moreover, nonlinearity of the hedonic price function implies that the attribute prices depend upon the consumption choices of households. By using the assumption of xed supply of groom attributes, as well as appropriate instruments for the endogenous attribute prices, consistent parameter estimates are derived in this paper. Results support the hypothesized, equalizing differences, role of marital arrangements for uneducated brides in India. Measurable groom characteristics on which compensating price differentials have been shown to arise empirically include grooms age at marriage, education and height. Consistent with ethnographic evidence, results indicate that dowries are higher in regions more to the north. Most importantly, contrary to popular belief, it is found that holding groom characteristics constant, real dowries have decreased over time. Finally, in estimating the parameters of the demand functions for a set of groom attributes, results show that the most important determinants of demand for

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various groom attributes are price of the attribute, brides traits, and the socio-economic status of the brides household.

2. Theory of equalizing differentials This section follows Raos (1993a) adaptation of Rosens (1974) implicit market model. Marriages are typically arranged by households of the groom and bride in India. It is assumed that the groom and his household, with characteristics G; derive utility from a numeraire good X and from a vector of n desirable traits of the bride and her household B; more formally U U X ; B; G; aG
G

U 0 . 0;

U 00 , 0

where a is a vector of preference parameters that describe the groom and his household. The groom household maximizes (1) subject to an exogenous nonlinear budget constraint: X Y G DB; G; S; d 2

where Y G is the premarital wealth of the groom household, DB; G; S; d is the hedonic dowry function that maps the traits of potential brides and grooms to a transfer between their households, S is a vector of social, cultural and demographic dowry shifters and d is a vector of parameters describing the function D: Similar to the groom household, the bride households utility is dened over a numeraire good Z and n desirable traits of the groom and his household, G; conditional on traits of the bride and her household, B V V Z ; G ; B ; aB
B

V 0 . 0;

V 00 , 0

where a is a vector of preference parameters of the bride household. The bride household maximizes (3) subject to the exogenous nonlinear budget constraint Z D B; G ; S ; d Y B 4

where Y B is the premarital wealth of the bride household. Marital matches, as well as the price associated with each match, are determined in the marriage market. Equilibrium occurs at a point at which the marginal rate of substitutions of the ith attribute with the numeraire good are equal for a pair of groom and bride households while being tangential to the dowry curve. DB; G; S; d then represents a locus of tangencies of the equilibrium matches, which gives the minimum (maximum) transfers available in the marriage market, for each package of B; G; to the bride (groom) households (Rao, 1993a; p. 668)

fBi

U Bi VG i 2DBi uGi DGi ;i UX VZ

where fBi UBi =UX is the offer-function for the groom household; the dowry a grooms family is willing to accept, or the bride price they are willing to pay for alternative values of Bi ; at a given utility, income and S: Likewise, uGi is the bid function for the bride

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Fig. 1. A marriage market equilibrium.

household; the dowry a brides family is willing to pay, or the bride price they are willing to accept for alternative values of Gi ; at a given utility, income and S: Fig. 1 denotes such equilibria for one trait. The groom from the household with offer curve f1 is matched with a bride from the household with bid curve u1 at a point below the zero line, so a bride price is exchanged. Similarly, f2 is matched with u2 on the zero line, so no monetary transaction takes place in either direction. Finally, the groom belonging to the household with offer curve f3 marries the bride belonging to the household with bid curve u3 : At their point of equilibrium a transfer is made from the bride household to the groom household in the form of a dowry.

3. Estimation It is assumed that the supply of grooms traits with respect to their individual and household attributes is either exogenously xed or at least unresponsive to changes in the bride households taste. This assumption implies that the personal characteristics of the bride and her household do not inuence the amount of dowry in comparison with the socio-economic characteristics of the groom and his household. That is, the equilibrium marriage payments are a function only of the groom quality differences DG; S; d rather than groom/bride quality differences DB; G; S; d: This assumption seems restrictive, as intuitively one would expect the real value of transfers from brides and their families to increase in the grooms (and his parental households) attributes and decrease in the brides (and her parental households) attributes. However, the paper tests the validity of this assumption. While the results supporting it are presented in Section 6, its importance in identifying the system of characteristic demand equations is described in Section 5.

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Grooms can be viewed as a package consisting of various combinations of a smaller number of characteristics for which no explicit market exists. It is often of interest to estimate structural demand functions for these attributes, but the absence of directly observable attribute prices poses a problem for such estimation. In an inuential paper, Rosen (1974) proposed a two-step procedure to overcome this problem which, adapted for the Indian marriage market, works as follows: The rst step requires specifying the hedonic dowry function, DG; S; d: This involves regressing observed dowries on the relevant characteristics of the grooms, their households and exogenous dowry shifters, using a functional form that best ts the data: DG; S; d DG1 ; G2 ; ; Gn ; S 6

From the resulting estimates, a set of marginal implicit prices, Di s, are obtained. These are estimates of the bride households willingness to pay for marginal increases in the individual attributes of the grooms and their households and are calculated as Di G; S; d

DG; S; d G i

i 1; ; n

at points corresponding to the sample values of G: Given the nonlinear nature of the hedonic function the implicit marginal prices are seldom constant and vary with the quantity consumed of a particular attribute. The next step involves estimation of demand functions for each attribute by using the marginal prices estimated in the rst stage and the quantity consumed of the groom attributes as endogenous quantity and price vectors. In line with traditional demand theory, the empirical counterparts of the demand functions can be specied as
B B Gd i Fi D1 G; S; d; D2 G; S; d; ; Dn G; S; d; Y ; B; a

i 1; ; n

B where Gd i is the demand for the ith attribute, Di G; S; d is the price vector, Y is a measure of the bride households income, B is a vector of traits describing the bride and her household, and aB is a vector of preference parameters such as household size and place of residence which have an economic and cultural impact on the demand for groom attributes and hence the size of dowry payments.

4. Data The data used in this paper are from a household survey for a study titled Poverty, Gender Inequality and Reproductive Choice. The eldwork for this study was carried out by the National Council of Applied Economic Research, New Delhi, between July 1995 and September 1995. Seventy villages representing ve districts of Uttar Pradesh (North India) and ve districts of Karnataka (south India) were chosen for the study, resulting in a sample size of 1878 households. Districts were chosen to represent the agroclimatic diversities of each state. After eliminating the households with missing data, 1037 observations are left spread more or less evenly across the ve districts of Uttar Pradesh and Karnataka.

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The term dowry has been used in a number of different ways in the literature. Like Rao (1993a), it is employed here to mean the net exchange of all cash and in-kind gifts made from the bride household to the groom household at the time of marriage, and the expenses incurred in marriage ceremonies by the bride household (net of those incurred by the groom household). The transfers in kind were valued by the investigators according to prices prevailing during the year of marriage. Additionally, monetary transfers were made at vastly different points in time, with the earliest marriage dating to 1956 and the most recent to 1994. To deal with this problem, the consumer price index3 was used to convert all net dowry values to constant 1994 prices. Households surveyed reported amounts both received and paid in cash and in-kind at the time of marriage (including transfers of gold and silver, land, livestock and consumer durables), as well as details about the year of marriage. However, breakdown of the monetary transfers is not available by composition in the dataset with the exception of information on cash transfers between the bride and groom households. Moreover, data on the pre-marital income of the bride and groom households is also not available. However, it is likely to be highly correlated to parental household wealth at the time of marriage. The 1995 Retrospective Survey obtained information on the parental household wealth (in terms of land owned) of both marriage partners just before they were married. The use of this wealth variable ensures that the bride households wealth variable is exogenous to the groom selection and dowry decisions (Rao, 1993a). Summary statistics of the variables used in the empirical analysis are given in column 1 of Table 1. There is substantial variation in the net dowry transfer suggesting both temporal variation as well as signicant regional differences in its determinants. It is also interesting to note that while the grooms are older, taller and more educated than their brides, the parents of the bride owned more land than the parents of the groom. This indicates a fair degree of male hypergamymarriage to a person of equal or superior caste or classin the sample. For example, the average marriage took place in 1979 between a 16-year-old bride and a 22-year-old groom with 2.1 years and 4.7 years of schooling, respectively. While the heights of the bride and groom were 152.1 centimeters and 163.7 centimeters, their parental households owned 3.6 acres and 3.1 acres of land at the time of marriage. Since, women marry earlier than men in India, the grooms sisters are more likely to have married and left their parental home than the brides sisters. This shows up in column 1 of Table 1 where the bride households not only have more daughters and children compared to the groom households, but also own more land as the groom households have already provided dowries for their married daughters. Moreover, women in India migrate predominantly on account of marriage. Generally, higher payments are made for women who migrate a long distance away from their natal homes to their marital homes as marriages contracted at a distance can inuence a households ability to smooth its consumption when confronted with highly variable income streams (Rosenzweig and Stark, 1989). The summary statistics reveal that an average bride migrated 29 km to marry a groom in the sample.
3 The GDP deator was also used to make dowries comparable across time. The results were not qualitatively different from those reported here.

242 Table 1 Summary statistics Variables

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Mean

Mean (uneducated brides)

Mean (educated brides)

Net dowry transfer (constant 1994 144,492.70 (166,772.1) 136,523.90 (164,804.8) 160,972.70 (169,830.6) rupees) Grooms age at marriage 22.21 (5.36) 21.51 (5.53) 23.67 (4.66) Brides age at marriage 16.22 (3.73) 15.58 (3.70) 17.53 (3.44) Grooms schooling (year) 4.75 (4.76) 3.51 (4.29) 7.31 (4.68) Brides schooling (year) 2.06 (3.55) 6.32 (3.42) Grooms height (cm) 163.69 (6.57) 163.11 (6.70) 164.91 (6.12) Brides height (cm) 152.06 (7.71) 151.67 (7.43) 152.87 (8.23) Grooms fathers landholdings (acre) 3.10 (6.51) 2.66 (5.99) 4.01 (7.39) Brides fathers landholdings (acre) 3.64 (9.38) 2.98 (9.53) 5.01 (8.93) % of daughters in the groom 35.03 (22.97) 33.93 (23.17) 37.29 (22.42) household Number of children in the 4.66 (2.15) 4.58 (2.14) 4.83 (2.18) groom household % of daughters in the bride household 59.35 (20.17) 59.12 (19.47) 59.84 (21.57) Number of children in the bride 5.06 (2.00) 5.02 (1.94) 5.14 (2.14) household Year of marriage (19__) 79.38 (8.71) 78.26 (8.70) 81.69 (8.27) Distance of marriage migration (km) 28.95 (67.38) 27.47 (70.85) 32.02 (59.53) High caste 0.44 0.36 0.60 Middle caste 0.40 0.44 0.32 Low caste 0.16 0.20 0.07 Uttar Pradesh 0.45 0.51 0.33 Karnataka 0.55 0.49 0.67 N 1037 699 338 Standard deviations in parentheses.

Finally, of the total households in the sample, 44% were high caste, 40% were middle caste and the remaining 16% belonged to the lowest caste;4 45% were located in Uttar Pradesh (north India) and 55% were in Karnataka (South India).

5. Econometric issues Rosens implicit market model has important implications for estimation that have yet to be fully resolved. Two of the most important are identication of the structural parameters and simultaneity bias. 5.1. Identication The essence of the identication problem inherent in the implicit market model is that parameters of preference aG ; aB are confused with parameters of the hedonic dowry

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function d (Fig. 1). The recovery of preference parameters becomes difcult because the interaction in the marriage market of individual demand (brides) and individual supply (grooms) produces a market clearing function which relates the price of a match to the bundle of characteristics provided by the brides and grooms. As a result, the marginal price for a characteristic, used in analyzing demand in the second step of Rosens model, is an estimate of both the marginal bid and the marginal offer function for any vector of observable characteristics. Following Harrison and Rubinfeld (1978), the assumption of xed supply of grooms traits is utilized to circumvent the identication problem. While this assumption seems restrictive, all it basically implies is that the dowry transferred to the groom and his household at the time of marriage does not depend on the characteristics of the bride and her household. In other words, it means that from the perspective of the grooms, the brides are relatively homogeneous. In such a case, each groom household will have the same offer function, or the same function relating the dowry that they willing to accept from the brides household. Since, the offer function must be tangent to the hedonic dowry function when groom households maximize utility, the assumption that supply is xed implies that the hedonic dowry function will be equivalent to the offer function; thus making it possible to separate preference parameters of the bride household aB from the parameters of the hedonic function d: However, there is a growing consensus in the literature that even with perfectly inelastic supply, the problem of separating aB from d remains. According to Brown and Rosen (1982) and Diamond and Smith (1985) demand for attributes cannot be fully identied without some form of exogenous variation in marginal prices that is independent of demand. As regardless of the supply side, a households choice of quantities implies the simultaneous choice of marginal prices due to nonlinearity of the hedonic function (see Eq. (7)). Despite these problems, parameters of the structural model can be identied and estimated consistently. To ensure proper identication, one commonly proposed procedure is to pool data from multiple markets separated by time or space to assure the presence of exogenous price variation. A restrictive assumption of this approach is that it requires preferences to be identical across markets. The data used in this study come from two spatially segmented markets, Uttar Pradesh in North India and Karnataka in south India. Considerable socio-cultural differences between these two regions limits the plausibility of the structural parameters being the same in these two markets. Another effective approach to estimating independent variation in the marginal price function that enables the systems identication is to impose restrictions on the functional forms of the hedonic equation and the demand function. The advantage of this approach is that it does not depend upon the implausible assumption that the demand function is the same in two seemingly very different markets. The disadvantage, however, is that theory provides no guidance in the choice of functional forms. Moreover, these restrictions need to be chosen carefully, as Brown and Rosen (1982) have shown that under certain functional forms, the coefcients of the characteristics in the second-step (demand equation) regression can be derived exactly from the coefcients of the hedonic equation. Murray (1983) has labeled this phenomenon the spurious correlation problem. Identication in this paper is achieved by specifying the following

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non-nested functional forms for the hedonic dowry function and the demand functions, respectively, so that the Brown and Rosen (1982) problem does not arise ln D d0
n X i1 B Gd i a0 n X i1

di lnGi
m X in1

k X in1

di Si 1i

aB i Di

aB i B i 1i

10

where Gi is a measure of the grooms individual and family traits at marriage, such as his age, schooling, height, parental wealth and caste afliation. Si is a vector of exogenous dowry shifters not related to the household traits, such as regional variations and the year in which the marriage took place, that can cause the prospective spouses to have a surplus of desired traits in the marriage market. Furthermore, in Eq. (10), Gd i is the demand for the ith groom attribute; Di s are the set of the implicit marginal prices of grooms age, schooling and height; and the Bi s are measures of the brides age, schooling, height and family wealth at marriage as well as a measure of her household size, caste afliation and distance of marriage migration. The correct functional form of the hedonic price function is essentially an empirical question. The hedonic price literature has frequently used four functional forms-linear, semi-logarithmic, log-linear, and inverse semi-logarithmic. A double-log specication of the hedonic dowry function was chosen based on the minimization of the residual sums of squares for the regressions, where the dependent variable was standardized by multiplying it with the inverse of its geometric mean (see Maddala, 1977; pp. 315 317). 5.2. Simultaneity bias Simultaneity in the implicit market model arises as a result of non-linearity of the hedonic function, which allows the bride household to endogenously choose the quantity of groom characteristics consumed as well as the price paid for these attributes. In other words, marginal prices depend upon the consumption choices of the bride household. This means that OLS applied to demand Eq. (10) will yield biased and inconsistent parameter estimates. Following Epple (1987) and Bartik (1987), an instrumental variable (IV) estimation procedure is used to estimate parameters of the demand equations consistently. The instruments used for non-constant marginal characteristic prices include the year the groom became head of the household (year of marriage), region, the exogenous variables in the model, their squares and cross products. Success of such an approach depends on the quality of the instruments used. Moreover, in nite samples, IV estimates are biased in the direction of the expectation of the OLS estimator, the magnitude of which depends on both the sample size (as the sample size increases, the bias is reduced) and the multiple correlation between the instruments and the endogenous explanatory variable (as R2 increases, the bias of the IV estimates decreases) (Bound et al., 1995). Since, R2 is useful as a rough guide to the quality of IV estimates, it is reported when IV estimates of individual demand functions are presented.

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6. Results 6.1. Identifying assumption Recall the condition necessary to obtain reasonably consistent structural estimates: the assumption of exogenously xed supply of grooms with respect to their individual and household attributes. The most important implication of this assumption is that willingness to accept a dowry by the groom household does not depend upon the traits of the bride and her household. To test the validity of this assumption, dowry was regressed on the characteristics of the bride, the groom and their respective households. Results (see Table A1) indicate that while age, schooling and height of the groom were valued traits, education was the only signicant bride characteristic.5 However, the sign on the coefcient for brides schooling is positive, implying that the real value of transfers from brides and their families to grooms and their families is not decreasing in brides schooling. It is unlikely that higher schooling of the bride would cause the price of a groom of a particular quality to go up. An alternative explanation could be omitted variable bias, where the omitted variable might be parents wealth, imperfectly proxied here by landholdings and daughters education (Edlund, 2000). This is supported by the inclusion of parental landholdings at marriage as an independent variable which has an insignicant effect on monetary transactions as well as on the signicance of the estimated coefcients. The result above echoes conclusions elsewhere in the literature on marriage payments, where typically the quality of brides is found to have little effect on dowries (Sandhu, 1988; Saroja and Chandrika, 1991; Billig, 1992). Access to education and opportunities for employment has expanded far more rapidly for men than for women in India, particularly in rural areas (Stone and James, 1995). Unequal social and parental investment in male and female children has further amplied womens disadvantage in the marriage market (Banerjee, 1999). As a result education levels among women have not yet advanced to a stage where they would be incompatible with early marriage (Bhat and Halli, 1999). Indeed, 85% of the brides and 23% of the grooms were married by the age of 18 in the rural sample used for this study. Moreover, only 23.6% of the brides and 72% of the grooms reported having some years of schooling. Column 1 of Table 1 indicates that education of the brides and their age at marriage varies much less than education and age of the groom at marriage. Also, variation in the height of brides 18 years of age or younger was much smaller, suggesting that the brides are relatively more homogeneous compared to the grooms in the sample. Consequently, dowry is largely driven by the quality of grooms and is unaffected by the quality of brides (except their education, which is more of an imperfect proxy for parental wealth). Given that brides schooling was the only trait that mattered, the hedonic dowry function was estimated separately for different levels of brides education. In doing so, a striking result was obtained. It was found that while dowry is unresponsive to the socioeconomic characteristics of the bride and her household when the bride has zero years of
5

These results remain unchanged with alternative specications of the hedonic dowry function.

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schooling and is considered uneducated for the purposes of this paper (see Table A2), it is the characteristics of the groom and his household that have no inuence on dowry when married to an educated bride with some years of schooling (see Table A3). This result suggests that uneducated brides might not compete in the same market as the educated brides. Columns 2 and 3 of Table 1 present the summary statistics by education of the brides in the sample. Clearly, educated brides are more likely to be older, taller, marry better quality grooms, come from upper socio-economic strata, belong to Karnataka, and receive 18% more dowry than uneducated brides. Therefore, it appears that marriage markets are segregated by education and wealth in India, and that educated brides compete in a smaller market for grooms with its own pricing and clearing mechanisms. Moreover, higher transfers received by educated brides, most of whom belong to wealthier families, compared to uneducated brides suggests that dowry may be more a function of their receiving larger bequests or pre-mortem inheritance from their households and less a result of the quality of the grooms they marry. 6.2. Determinants of dowry Since, the identication condition is satised for uneducated brides, the OLS estimates of the hedonic dowry function for them are reported in Table 2. Column 1 reports estimates excluding a wealth variable for the groom household, column two includes it, and column three considers both the wealth and caste afliations of the groom household. The inuence of grooms education on net dowry is as expected: educated grooms are worth more in the marriage market, as is indicated by the signicant positive coefcient in the hedonic function for grooms education. The relationship between grooms age at marriage and dowry is also signicant and reveals that the older the groom the larger the dowry. Older men may be economically more successful and, being a better match,

Table 2 OLS Estimates of the hedonic dowry function (double-log form) with xed supply of grooms for uneducated brides Variable Intercept Grooms age at marriage Grooms schooling (year) Grooms height (cm) Grooms fathers landholdings (acre) Middle caste High caste Uttar Pradesh Year of marriage N R2 F -statistics 1 3.770 (1.20) 0.401* 0.118 (4.60)* 2.366 (3.83)* 2 3.737 (1.19) 0.402 (3.55)* 0.119 (4.47)* 2.373 (3.82)* 2 0.001 (0.16) 3 4.442 (1.41) 0.371 (3.27)* 0.108 (3.96)* 2.248 (3.63)* 2 0.011 (1.11) 2 0.013 (0.19) 0.165 (2.15)* 0.298 (4.68)* 2 0.075 (24.71)* 699 0.4984 85.7

0.259 (4.15)* 2 0.076 (24.61)* 699 0.4923 134.4

0.260 (4.14)* 2 0.076 (24.58)* 699 0.4923 111.85

Note: absolute t-values in parentheses. *Signicant at the 5% level.

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receive larger dowries from the bride households (Bergstrom and Bagnoli, 1993). The coefcient on grooms height is also statistically signicant. It suggests that the taller the groom, the larger the dowry he receives.6 Height is a function of nutrition. Hence, variation in height within grooms may proxy for unmeasured wealth of their households or caring for the groom by his parents, factors that may play into the size of monetary transfers. The inclusion of grooms fathers landholdings at marriage as an independent variable makes little difference either to the number of statistically signicant coefcients or to the size of the estimated coefcients. Though insignicant, it reveals that the higher the grooms family wealth, the lower the dowry. While the unexpected sign of the coefcient for this variable may be a result of improper information on pre-marital income of the groom household, it may also indicate a shift in the emphasis from household characteristics to the individual traits of the grooms, such as age at marriage, education and height. Since caste in India is positively related to the socio-economic standing of a household, it is included along with the land holdings of the grooms household in column three in the hope of providing better estimates for wealth effects on dowry. The highest ranked caste has a positive and signicant coefcient, indicating that grooms from upper caste households receive 16% more dowry than grooms from the lowest caste households. This lends support to the argument that a strong relationship exists between hierarchical status and marriage transactions in India (Tambiah, 1973). Among the shifter variables it is interesting to note the large and signicant regional variations in dowry payments. In Uttar Pradesh, dowries are 26% higher than in Karnataka, the omitted category. This is partly consistent with the ethnographic evidence pointing to a broad north south dichotomy in marriage transactions in India (Miller, 1980). According to this evidence, while overall costs to parents for the marriage of their daughters is higher in the north, reciprocity and balanced gift giving, including a bride price component, characterizes most of the south. The data, however, do not support the latter argument. There is no evidence of balanced gift giving and/or bride price in Karnataka. Finally, the estimated coefcient on year of marriage provides the most surprising result. It indicates that, holding groom characteristics constant, there has been a signicant decrease in the amount of real dowries over time. This contradicts not only a large body of evidence obtained from ethnographic studies (Dalmia and Lawrence, 2004) of the Indian marriage market, but also prior analysis of these markets, with an emphasis on rural southcentral India, using a traditional single-stage hedonic price model (Rao, 1993a). The consensus in the literature has been that, not only have real dowries increased over the last four decades, but in communities in which traditionally bride prices have been paid, there has been a switch to paying dowries (Epstein, 1973). One of the main arguments is that the marriage market has changed over a few decades from a surplus of potential grooms to a surplus of potential brides. Demographers hypothesize that this
6 This is a robust nding, as the increasing effect of grooms height on dowry payments is also present when the year of marriage is held constant.

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phenomenon, known as the marriage squeeze, has played a signicant role in the rise in dowries (Caldwell et al., 1983). 6.3. Dowry ination Despite the consensus in belief, actual evidence in favor of dowry ination in the literature is thin. With the exception of Rao (1993a,b), it is predominantly based on anecdotal evidence or small regional samples and village studies with inadequate empirical analysis or statistical signicance. Rao uses data on 141 marriages over a period of 1923 1978 from a retrospective survey conducted in 1983 by the International Crop Research Institute for the Semi-Arid Tropics in three districts of south-central India, to regress dowry on differences in the traits of brides and grooms in the marriage market using a quadratic specication for the hedonic dowry function. Although, he nds a positive and signicant association between the increase in marriage payments and the demographic availability of marriage partners, he does not explain why the average monetary transfers in the district of Mahbubnagar in his sample are negative in spite of an increase in the number of marriageable women compared to men over the period 1931 1971 in the region (Rao, 1993a, p. 673; 1993b, p. 290). Raos results are also not robust. Using the same data set, Edlund (2000) failed to nd signicant support for the marriage squeeze variable used by Rao in replications of his dowry function as well in its alternative specications. In addition, Anderson (2000) showed that under reasonable assumptions on age gaps at marriage, there are more men than women in the marriage markets in India, thus throwing further doubt on marriage squeeze as an explanation for dowry ination in India. Neither Rao nor Edlund provide evidence in favor of other possible causes. For instance, none of the individual traits of the bride and groom affect the size of monetary transfers from the bride households to the groom households.7 This might be a result of combining the small sample of 127 households8 with aggregate variables such as the gender ratio of women in the 10 19 age group to men in the 20 29 age group and the ratio of female workers to male workers used to test the marriage squeeze hypothesis and the effect, if any, of the relative reduction in female economic status on dowries. In this paper, the individual traits of the grooms and education of the bride are found to be signicant determinants of monetary transfers, and the real value of dowries is found to be signicantly decreasing over time. Robustness of the results cannot be checked with the inclusion of aggregate variables used by Rao, as information on age distribution and labor force participation of males and females is not available for the districts surveyed in the sample. Moreover, it can be argued that the negative coefcient on year of marriage is rather an indirect evidence of dowry deation in India. Therefore, to examine the effect on marriage payments of these demographic trends and to check if decline in the size of dowries is associated with changes in the composition of these payments, the sample was broken down into categories of time-period of marriage, class/caste, region, education, etc.
These results are substantially the same regardless of the functional form used for the hedonic dowry function. Edlund (2000) nds 14 duplicate entries in Raos data set, thus further reducing the size of his sample from 141 to 127 complete observations.
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Table 3 lends further support to the result on dowry deation in India. It shows a sizeable decrease in real dowry payments from Rs 428,571 at the end of the 1950s to Rs 41,349 at the beginning of 1990s in India. These results are also robust to dividing the data by region into north and south India. Furthermore, Table 3 shows that if the size of a dowry is expressed in terms of cash rather than a sum total of cash, real property, and movable property, there has been an increase over the period 1956 1970. The noticeable decline in cash transfers since 1970 and particularly after 1975 is consistent with the strong inuence on the age structure of the population of declines in fertility levels and son-preference, both of which have rapidly eased the marriage squeeze against females in India since 1971 (Bhat and Halli, 1999). There is also a regional pattern to this trend. Cash transfers, though smaller, register a decline a decade later in 1981 in the south compared to 1971 in north India. One explanation for this is that even though the fertility declines have been higher in the south, the acute son-preference in the north has had a larger impact on the population of marriageable women. The result of rising cash payments in the south over the period 1956 1980 is consistent with Raos (1993a,b) nding of increasing dowry payments in south-central India over the period 1923 1978. Results also show that the cash component of dowry has risen steadily for uneducated brides and that secondary education, rather than education per se,

Table 3 Average and median net dowry and cash transfers by year of marriage Year of marriage Panel A: India 1956 1960 1961 1970 1971 1980 1981 1990 1991 1994 1956 1994 Panel B: North 1956 1960 1961 1970 1971 1980 1981 1990 1991 1994 1956 1994 Panel C: South 1956 1960 1961 1970 1971 1980 1981 1990 1991 1994 1956 1994 N Average net dowry Median net dowry Average cash Median cash

14 165 364 378 116 1037 12 92 159 162 40 465 2 73 205 216 76 572

428,571.4 (369,984.8) 300,498.8 (249,363.9) 155,398.7 (115,031.5) 87,023.9 (105,463.1) 41,348.9 (38,324.9) 144,492.7 (166,772.1) 406,517.1 (397,042.9) 302,535.9 (271,321.8) 172,029.7 (138,255.6) 102,572.3 (144,657.3) 48,220.8 (55,650.3) 169,053.3 (200,001.8) 560,897.5 (67,991) 297,931.3 (220,417.1) 142,499.5 (91,424.2) 75,362.6 (59,282.1) 37,732.1 (24,562.3) 124,526.5 (130,641.2)

312,500.0 231,481.5 127,334.8 59,809.88 32,444.96 92,024.54 219,551.3 219,907.4 128,834.4 62,370.6 34,762.5 99,837.7 560,897.5 243,055.6 125,000.0 58,825.6 32,051.3 86,730.6

53,642.1 (118,380.6) 56,297.5 (224,227.6) 35,239.5 (179,723.2) 12,751.1 (39,770.02) 6351.7 (12,405.7) 27,409.8 (143,620.8) 66,680.2 (138,500.6) 77,802.5 (285,370) 36,710.9 (174,122.3) 16,373.3 (39,697.6) 9863.7 (15,913.8) 36,219.4 (170,801.6) 21,978 (30,261.4) 25,234.7 (64,258.7) 34,157.4 (184,185.4) 9905.1 (39,696) 4090.6 (8906.8) 19,822.9 (114,830.6)

6410.3 6481.5 3824.8 2717.4 641.0 2943.5 6410.3 12,820.5 6711.4 5447.5 2564.1 6711.4 21,978 0.0 0.0 0.0 0.0 0.0

Standard deviations in parentheses.

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enhances the value of a bride to the family of a prospective groom. Moreover, the cash payments are found to be particularly high among the middle caste/class in the north and are found to foster alliances amongst the upper socio-economic strata in the south. Ethnographic studies on marital payments in India have consistently reported a broad north south dichotomy in types of marriage payments and overall cost of marriage (Dalmia and Lawrence, 2004). Accordingly, it is held that while dowry payments are more common among both upper and lower castes and class in the north, wedding costs in the south are more equitably shared between the two sides at lower levels of caste or class than they are among the wealthy and prominent (Caplan, 1984; Miller, 1980). This is also evident in Table 3, where the average net dowry and cash payments are universally higher than their corresponding median values, thus reecting that only a small number of households gave very large dowries and cash. For example, in South India dowry was given in the form of cash by only 40 44% of the total households. While a full analysis of the trend in dowry payments would be of great value, it is beyond the scope of this paper and must await future research. As mentioned earlier, most of the evidence on dowry ination is based on small regional samples and village studies. It would be advantageous to have more precise regional (urban versus rural), statewide, or national level data on marriage transactions. Until such data is available, and in view of larger cases of dowry ination and dowry-related abuse reported in urban India, results of this paper must be interpreted conditional on the observable characteristics of the sample population. 6.4. Demand for groom characteristics Since some of the individual quality variables are not signicant, the rst specication of the hedonic dowry function is chosen for the second stage of the analysis. The results of the two-stage least squares demand estimation are presented in Table 4. The adequacy and reliability of the structural model can most directly be evaluated by examining the pricequantity relationship, which each equation suggests for a given Gi and its price Di G: One would expect a signicant negative coefcient for each attribute in its own willingness-topay equation and, in fact, this result is obtained for grooms age and education. The only exception is the coefcient on the marginal price of grooms height, which is positive and signicant in its own demand equation. Support for the claim of social stratication or market segmentation (that higher income consumers purchase greater amounts of all characteristics) is provided by looking at the relationship between caste ranking and demand for groom characteristics. Status effects, as measured by caste of the bride household, are positive and signicant in three of the six measures indicating that the higher the caste ranking of the bride household, the higher the demand for groom characteristics. For example, the willingness to pay of the highest caste ranked bride household for grooms education is 6.3% higher than that of the lowest caste households. Among the taste shifters, percentage of daughters in the bride household signicantly affects the willingness to pay for grooms education but has an insignicant effect on the demand for grooms height. While this can be viewed as nothing else but a budget

S. Dalmia / Research in Economics 58 (2004) 235255 Table 4 2SLS Estimates of the demand equations for groom attributes (uneducated brides) Variable Intercept Marginal price of grooms age at marriage Marginal price of grooms schooling Marginal price of grooms height Brides age at marriage Brides height (cm) Brides fathers landholdings (acre) % of daughters in the bride household Middle caste High caste Distance of marriage migration N R2 F -statistics R2 between instruments and the endogenous marginal prices Grooms age Grooms schooling Grooms height

251

2 0.84 (0.29) 1.43 (0.47) 2 0.001584 (6.04)* 0.000143 (0.50) 0.000234 (7.07)* 0.0012 (2.58)* 0.833 (15.14)* 0.050 (2.77)* 0.000247 (1.69) 0.008 (2.17)* 1.23 (3.23)* 2.15 (5.21)* 2 0.001939 (1.02) 699 0.6087 107.02 0.3587 2 0.000406 (11.32)* 0.0016 (3.22)* 2 0.080 (1.35) 0.026 (1.33) 2 0.000246 (1.56) 2 0.012 (2.59)* 2 0.17 (0.40) 0.63 (2.41)* 0.001423 (0.69) 699 0.2363 21.29 0.2590

96.61 (20.65)* 2 0.000898 (2.06)* 2 0.000108 (1.97)* 0.0018 (2.41)* 2 0.136 (1.49) 0.445 (14.77)* 0.000317 (1.31) 0.012 (1.01) 2 0.49 (0.68) 0.46 (0.67) 2 0.000524 (0.16) 699 0.2626 24.51 0.3217

Note: absolute t-values in parentheses. *Signicant at the 5% level.

constraintfathers with more daughters paid smaller individual dowries for them because of cash constraintsit can also indicate a father caring for all his daughters in the same way so as to provide equal dowries to them (Botticini, 1999). Furthermore, the signicant positive coefcient on percentage of daughters in the demand for grooms age equation suggests that, in order to consume larger amounts of age, households must trade-off the consumption of other attributes. What the groom characteristics demand models reveal is that households do trade-off grooms education for age because of a budget constraint. None of the coefcients on the variable measuring the distance of marriage migration are signicantly different from zero. Thus, no support for Rosenzweig and Starks (1989) argument that a brides parents are willing to pay more for the opportunity to diversify their income risks through informal credit provided by their in-laws living, at a distance, in areas characterized by different income risks, is found in the data. Finally, the R2 between the instruments and the endogenous marginal prices of grooms attributes are reported in the last row of Table 4. It ranges between 0.26 and 0.36, suggesting that the instruments employed in estimating the parameters of the demand functions are reasonably good.

7. Conclusions This paper uses data from a retrospective sample survey to develop and test a framework capable of explaining dowry exchange and groom selection in India. It adapts Rosens (1974) implicit market model and nds support for the hypothesized, equalizing

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differences, role of marital arrangements for uneducated brides in India. This is an important result as it suggests the existence of separate marriage markets for uneducated and educated brides in India. The measurable groom characteristics on which price differentials arise empirically include grooms age at marriage, education and height. The results also indicate that status of the grooms household is a valued trait; grooms from higher socio-economic strata command higher dowry, although in the case of wealth the results are less conclusive. Consistent with ethnographic evidence, results indicate that dowries are higher in regions more to the north. Perhaps the most surprising result of this analysis is the sign of the coefcient on year of marriage in the hedonic dowry function. Contrary to popular belief, it reveals that, holding groom characteristics constant, real dowries have decreased over time. However, a careful examination of the various components of marriage payments provides results that are partly consistent with reports on dowry ination in the literature as they reveal an increase in cash payments over the period 1956 1970. Results also indicate an upward trend in cash transfers for uneducated brides. Finally, an instrumental variable approach is used to derive consistent parameter estimates of the demand functions, results of which show that the most important determinants of demand for various groom attributes are price of the attribute, brides traits, and the socio-economic status of the brides household.

Acknowledgements I am grateful to two anonymous referees for suggestions that greatly improved the paper. I also thank Abusaleh Shariff and B.L. Joshi at the National Council of Applied Economic Research, New Delhi for providing the data.

Appendix A
Table A1 OLS Estimates of the hedonic dowry function (double-log form) Variable Intercept Grooms age at marriage Brides age at marriage Grooms schooling (year) Brides schooling (year) Grooms height (cm) Brides height (cm) Grooms fathers landholdings (acre) Brides fathers landholdings (acre) Uttar Pradesh 1 2.253 (0.82) 0.320 (2.11)* 0.212 (1.45) 0.101 (4.37)* 0.183 (6.87)* 2.038 (3.51)* 0.622 (1.41) 2 2.079 (0.75) 0.332 (2.18)* 0.199 (1.35) 0.108 (4.55)* 0.184 (6.86)* 2.085 (3.58)* 0.615 (1.39) 2 0.008 (0.96) 2 0.003 (0.37) 0.253 (4.77)*

0.253 (4.81)*

S. Dalmia / Research in Economics 58 (2004) 235255 Table A1 (continued) Variable Year of marriage N R2 F -statistics 1 2 0.078 (29.65)* 1037 0.5031 130.12 2

253

2 0.078 (29.65)* 1037 0.5039 104.21

Note: absolute t-values in parentheses. *Signicant at the 5% level.

Table A2 OLS estimates of the hedonic dowry function (double-log form) for uneducated brides Variable Intercept Grooms age at marriage Brides age at marriage Grooms schooling (year) Brides schooling (year) Grooms height (cm) Brides height (cm) Grooms fathers landholdings (acre) Brides fathers landholdings (acre) Uttar Pradesh Year of marriage N R2 F -statistics 1 3.919 (1.17) 0.314 (1.75)* 0.111 (0.63) 0.117 (4.52)* 2.457 (3.43)* 2 0.118 (0.20) 2 3.643 (1.08) 0.313 (1.74)* 0.110 (0.62) 0.120 (4.44)* 2.496 (3.47)* 2 0.098 (0.16) 0.003 (0.32) 2 0.010 (1.04) 0.244 (3.79)* 2 0.076 (23.43)* 699 0.4934 74.57

0.252 (3.94)* 2 0.076 (23.45)* 699 0.4926 95.84

Note: absolute t-values in parentheses. *Signicant at the 5% level. **Signicant at the 10% level.

Table A3 OLS estimates of the hedonic dowry function (double-log form) for educated brides Variable Intercept Grooms age at marriage Brides age at marriage Grooms schooling (year) Brides schooling (year) Grooms height (cm) Brides height (cm) Grooms fathers landholdings (acre) Brides fathers landholdings (acre) Uttar Pradesh Year of marriage N R2 F -statistics 1 2 0.786 (0.16) 0.374 0.550 (2.08)* 0.009 (0.18) 0.251 (2.82)* 1.418 (1.41) 1.743 (2.65)* 2 2 0.594 (0.12) 0.337 (1.17) 0.561 (2.08)* 0.024 (0.43) 0.261 (2.91)* 1.413 (1.41) 1.734 (2.64)* 2 0.024 (1.28) 0.010 (0.82) 0.288 (3.09)* 2 0.086 (18.54)* 338 0.5355 37.70

0.273 (2.95)* 2 0.085 (18.44)* 338 0.5309 46.54

Note: absolute t-values in parentheses. *Signicant at the 5% level.

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