How homophobia hurts india's economy

Published: June 10, 2014

New World Bank research suggests discrimination toward the lesbian, gay, bisexual and transgender community is costing India billions of dollars.


Homophobia in the workplace in India and lost productivity as a result of discrimination are among some of the findings in a report by U.S.-based economist M.V. Lee Badgett that is part of an upcoming study for the World Bank. Ms. Badgett’s study also looks at how homophobia triggers high rates of depression and suicidal behavior, which can also affect the economy.


With this, Ms. Badgett estimates that homophobia cost India’s economy between 112 billion rupees ($1.9 billion) and 1.7 trillion rupees ($30.8 billion) in 2012. To put that figure into context: India lost between 0.1% to 1.7% of its potential gross domestic product that year.


A year later, in 2013, India’s Supreme Court reinstated a ban on gay sex, a huge setback for the country’s burgeoning gay rights movement.


Ms. Badgett is the director of the Center for Public Policy and Administration at the University of Massachusetts Amherst, as well as a professor of economics. Ms. Badgett spoke to The Wall Street Journal about her preliminary findings, the methodology behind her research, and why she believes the economic impact of homophobia is even greater than what she estimates.


Edited excerpts:


The Wall Street Journal: Why pick India as your case study?


M.V. Lee Badgett: It’s a country where there is a movement for LGBT rights and there are many organizations created by LGBT people. Also, there’s data, not a lot, but some, mainly through HIV/AIDS-related research, which gave me something to work with when I was trying to come up with some quantifiable estimates.


But homophobia exists in every country in the world, even those with formal equality where, for example, same sex marriage is legal. So this study uses India as a case study but its findings of economic costs could be applied to any country.


WSJ: How did you arrive at the figure of up to $30.8 billion?


Ms. Badgett: In short, I calculated the estimated lost wages of LGBT people in India. I had to draw on data on LGBT discrimination measured as gaps in labor market earnings by sexual orientation in Europe and North America because it doesn’t exist for India.


Second, the research on health shows that rates of depression, suicidal thinking and HIV/AIDS are much higher among Indian LGBT people than the general Indian population. Healthier workers are more productive, so higher rates of illness for LGBT people reduce their ability to contribute to economic output. Health disparities also generate extra healthcare costs.


The highest end of the range of estimates for the two pieces together put the cost at $30.8 billion.


WSJ: What was your reaction when you first arrived at that number?


Ms. Badgett: I was surprised at how big the loss to India’s economy could be. But we have other studies showing that the exclusion of certain groups of people is costly. There’s a whole area of research that shows the exclusion of women is very costly to economies. So my findings fit into the larger context of thinking about the importance of inclusion for economic growth and suggest our economies would be much stronger and vibrant if we had less prejudice and discrimination against many different groups of people.


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