DeMo by NaMo (Demonetization by Narendra Modi): Money burning in India

Despite the well-documented hardship caused by demonetization policy
implemented on 8^th November 2016 in India, the large scale public support
and acceptance of it was puzzling. Was this acceptance a silent protest to
punish those with ill-gotten wealth and an aversion towards the growing
inequality in the country?
Motivated by this ambiguity, this thesis attempts to understand the
demonetization acceptance as being in line with the research in experimental
economics and experimental psychology that argues that notions such as
inequity aversion and fairness drives human behaviour into taking decisions
which are not economically rational. More specifically, the study will examine
the role of social preferences and fairness in an economic agents’ behaviour.
The research paper designs a “money-burning” experiment in a field
setting in India and attempts to mimic the acquisition of money through unfair
means (black money) and thereafter offers participants a chance to punish each
other (reduce each other’s money at a cost to themselves). The study finds a
balanced support for both, self-interest behaviour and fairness preference.
Empirically, the study did not find any link between the burning behaviour and
demonetization acceptance.