Why Dowry Payments Declined with Modernisation in Europe but Are Rising in India

In contrast to most dowry oriented societies where payments have declined with modernisation, those in India have undergone signi ̄cant in°ation over the last ̄ve decades. This paper explains the di®erence between these two experiences by focusing on the role played by caste. The theoretical model contrasts caste and non-caste based societies: in the former, there exists an inherited component to status (caste) which is independent of wealth, while in the latter, wealth is the primary determinant of status. Modernisation is assumed to involve two components: increasing average wealth and increasing wealth dispersion within status (or caste) groups. The paper shows that, in caste-based societies, the increases in wealth dispersion which accompany modernisation necessarily lead to increases in dowry payments, whereas in non-caste case based societies, increased dispersion has no real e®ect on dowry payments and increasing average wealth causes the payments to decline. JEL Classi ̄cation Codes: J12, J16, D10