Implications of an Economic Theory of Conflict

DRI Working Paper No. 66
By Anirban Mitra and Debraj Ray

We study inter-group conflict driven by economic changes within groups. We show that if group incomes are “low”, increasing group incomes raises violence against that group,and lowers violence generated by it. These correlations are tests for group aggression or victimization, which we apply to Hindu-Muslim violence in India. Our main result is that an increase in per-capita Muslim expenditures generates a large and significant increase in future religious conflict, an increase in Hindu well-being has no significant effect. This robust empirical finding, combined with the theory, suggests that Hindu groups have been primarily responsible for Hindu-Muslim violence in post-Independence India.