Understanding market interactions in street vending in Delhi
Street vending is a common urban occupation, but information about buyer-seller interactions and informal market transactions remains sparse. Understanding the complexities of street vending and street-connected children can lend crucial input into building resilient and inclusive cities.
Street vending is a familiar sight in urban landscapes worldwide, with vendors offering affordable goods at bustling traffic lights, transit stops, and markets. In India alone, street vending employs over six million individuals, accounting for over 4% of urban non-agricultural employment. The share is even higher (12-24%) in sub-Saharan Africa and Latin America. A recent article in the New York Times also highlights a growing trend of migrants turning to street vending, underscoring the global significance of this economic activity as a livelihood choice among the urban poor populations.
In many low- and middle-income countries, it is common to see children working alongside adults, adding an extra layer of socioeconomic complexity to the challenges of urban life (see Alem and Laha, 2016; Bhaskaran and Mehta, 2011). Despite the ubiquity of street vending and its economic importance, the difficulty of tracking vendors without a permanent location, their high mobility, and informality are some aspects that make it challenging to collect
comprehensive data, especially on children who are also vendors.
Understanding buyer-seller interactions among street vendors in Delhi
Motivated by this gap in urban policy, I study the intricacies of buyer-seller interactions and transactions in this informal market. In a multi-faceted approach, I combine large-scale observational data, experimentation, and surveys, to understand behaviour on both sides of this informal market. I started by collecting nearly 500 hours of observational data on around 400 vendors across Delhi's major street markets, transit stations, and traffic lights. During this, surveyors stood next to the vendors and collected real-time transaction details such as which passers-by vendors targeted, the price quoted, whether a sale was made, and the characteristics of the passers-by such as their gender.
As the observational data is influenced by both buyer and seller actions, to isolate and cleanly understand buyer behaviour, I designed a field experiment where I partnered with adult and child vendors and randomised which passers-by they approached to request to buy their product and what price they quoted. This allowed me to hold seller actions constant and I also ensured that all vendors had identical goods, scripts, and locations so that I could determine if passers-by treated child and adult vendors differentially. Simultaneously, to understand vendors' pricing strategy, in a separate pricing experiment, vendors were asked to quote prices for commonly sold goods for different buyers. Finally, to learn more about buyer psychology and decision-making, I conducted a survey of over 500 passers-by to collect information regarding their valuations of goods and their beliefs about street vendors. The study was conducted between 2021 and 2023.
Buyer response varies with who the vendor is and who is buying
Using observational data, I uncovered fascinating insights about buyer-seller interactions by noting the actions and reactions of over 50,000 passers-by. In particular, I realised that despite this being a competitive market with multiple sellers selling very similar goods like pens, balloons, and masks, transaction patterns and pricing varied significantly based on whether the seller was a child or an adult street vendor and whether the customers were women, men, or a couple.
In the field experiment, despite ensuring children and adult street vendors have identical goods, scripts, and locations, I found that passers-by are twice as likely to buy from a child compared to an adult street vendor. Additionally, despite no differences in valuation for these goods (which I confirm through the passer-by survey), couples and women are 90% and 28%, respectively, more likely to buy than men.
Figure 1: The likelihood of buying from an adult and child street vendor across different passers-by
Consistent with this, I observe that women and couples are also 50% more likely to be targeted by vendors than men, and they are also charged higher prices on average (4-38%). Moreover, consistent with the finding that buyers are more likely to purchase from child street vendors, children are almost 80% more likely to approach passers-by than adult street vendors (59% versus 33%).
Figure 2: Seller approach rate by child and adult street vendors across different buyers
Differences in generosity and chances of refusal of different types of buyers explain the purchasing patterns
I show that these findings are consistent with a model that incorporates generosity (that is, altruism) and a (psychological) cost of refusal (or denying a request) in the buyer’s decision-making. Empirical analysis suggests that individuals exhibit greater altruism towards children than adults as they donate more money to children compared to adults working on the street (measured in the passers-by survey). I also show in the field experiment that the purchasing probability doubles when passers-by are approached by the vendor and requested to buy as opposed to the vendor passively standing by and not requesting the passers-by to buy. Furthermore, survey data confirms that vendors target women or couples over men because they consider who would find it harder to refuse. Therefore, sellers, including children, consciously use inferences about buyer psychology in their targeting and pricing strategy, charging “emotional markups.”
Policy insights for supporting street vendors
Beyond recording sophisticated economic thinking even in subsistence entrepreneurship, my research yields important insights for policy. Documenting and understanding the nuanced patterns of consumer emotions and vendor strategies provides an opportunity for policymakers and NGOs to understand a source of comparative advantage and how children operate in this market.
It is important to holistically understand their situation and perspective. As the majority of street-connected children reported feeling proud to earn and safe to work on the streets as these are public spaces, crafting policies that not only acknowledge but also respect their agency could lead to more effective poverty alleviation strategies. For example, rather than banning children from street vending altogether, which could push them into more hazardous alternatives like begging and rag-picking, a more holistic approach that integrates support systems that offer pathways out of street work is needed. This could include vocational training, apprenticeships, or other interventions that provide children with skills and opportunities to transition into safer, more secure forms of employment as they grow older.
Since income from street vending is often volatile and unpredictable, adult vendors who rely solely on this work face significant financial instability. To support them, policies that focus on improving their economic security and resilience by addressing income volatility could be particularly helpful. As cities grapple with the challenges of urbanisation and economic inequality, understanding the complexities of street vending markets and street-connected children will be crucial in building resilient and inclusive urban environments.
A version of this article was first published by Ideas for India.