Is Literacy Beyond the Individual? Gender-Differentiated Intra-Household Externalities and Effective Literacy Measurement in India

Conventional adult literacy measures ignore the positive externalities of a literate person among illiterates within her close proximity. To account for those intra-household externalities, an expanded concept and measurement of literacy, namely, Effective Literacy is proposed in the literature. However, Empirical estimation of Effective Literacy is relatively underexplored. Using two rounds of data from the India Human Development Survey (IHDS 2004-05 and 2011-12), we estimate three types of Effective Literacy measures: (a) gender-neutral, and (b) gender-adjusted; and we further develop (c) a modified gender-adjusted measure, capturing the relative composition of male and female literate members. We observe that the literacy distribution across households improves from IHDS-I to IHDS-II. Our findings indicate that a literate female generates a larger intra-household externality than a literate male. Given the fact that the Effective Literacy measure is both more informative and sensitive to gender-differentiated externalities, as the focus on female literacy has been a common practice in developmental interventions for a long time, we propose that the utilisation of gender-adjusted Effective Literacy (or even its modified version) would be a more appropriate approach for targeted policy formulation.