The Cheat Sheet

‘What’s your gotra?’ The economics of kinship networks

Venky Vembu | Updated on December 06, 2018

Et tu?

Oh, I’m not wearing my clan lineage like a badge of honour — in the way that our petty politicians have been doing with a cynical eye on provincial-minded voters. I’m only pointing to the economic principles that govern such ‘kinship networks’ (as they are called).


You could call it that. Remember, however, that such kinship networks exist not only in India.

But what is a ‘gotra’?

In the prevalent belief system, a ‘gotra’ defines a clan that traces its ancestry to one of many ancient rishis (or sages). It represents a patriline, or an unbroken male hereditary line traced to that male ancestor.

And you say the belief exists in other cultures too?

Similar ‘group identity’ frameworks exist in most traditional societies in Asia (for instance, in China, Korea, Vietnam and the Philippines) and Africa. In China, the 10th-century treatise BaiJiaXing lists the most common family names (surnames) in Chinese history. These names can be traced back thousands of years, and to this day, people with the same surname have a sense of familial kinship. Similarly in Korea, families belong to bon-guan, or clan lineages, which influence their social mobility.

Where does economics come in?

Economists have studied the centrality of “community structures” in traditional societies where, in the absence of ‘formal’ financial markets and insurance opportunities, these informal kinship networks provide social security and reduce exposure to risks. For instance, in a 2012 paper, economists A Moshfiq Mobarak and Mark Rosenzweig drew attention to the research literature that establishes how, in the Indian context, jati (the sub-caste, which works as another kind of kinship network) plays “an important part in business investments, in employment and in risk-sharing.”

Tell me more.

It has been established in less-developed economies, where there is market failure, “social capital” and “social networks” play an important role in the economic well-being of societies. In a 2009 study, scholars Michael R Carter at the University of Wisconsin and Marco Castillo at the Georgia Institute of Technology noted that in such economies, “relations based on trust or informal enforcement mechanisms may provide the only avenues of access to credit and insurance.” And a key role in this respect is played by the “extended family (kinship), where membership of such a network is acquired by bloodlines, marriage, or adoption,” note scholars Salvatore di Falcol at the London School of Economics and Erwin Bulte at the Tillberg University in the Netherlands.

Sounds like a kin-based ‘social safety net’.

Sort of.

So, it’s all good, then.

It should be, except that as di Falco and Bulte note in their 2014 paper ‘The Dark Side of Social Capital?: Kinship, Consumption and Savings’, there are downsides to the ‘sharing obligation’ that characterises such networks: households try to avoid their ‘sharing obligations’ by accumulating durables that are non-sharable at the expense of durables that may be shared.

Why is that?

In their paper, di Falco and Bulte noted that one of their colleagues drove a car that seemed extravagant in proportion to his salary. This wasn’t a “status-seeking” choice, but a move to “credibly signal to his kinsmen that his residual resources for providing assistance were limited or non-existent.”


Regressive as they may seem, kinship networks derived from lineage or other family ties have an economic underpinning to them. But our politicians’ obsession with ‘gotra’ reflects nothing more than cynical ‘identity politics’ at work.

A weekly column that helps you ask the right questions.

Published on December 05, 2018

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