Developing views
Sunlight, Disease, and Institutions
James Ang et al.
Kyklos, August 2018, Pages 374-401
Abstract:
Higher exposure to ultraviolet radiation (UV‐R) is associated with greater prevalence of eye disease such as cataracts. We hypothesize that the variation in the intensity of UV‐R can help explain the differences in institutional quality observed across countries. The long‐term incentive and ability to improve the quality of institutions decline when the probability of blindness increases. Our reduced‐form cross‐country results support this hypothesis. We then propose that the mechanism works from the impact of UV‐R on the prevalence of eye disease, which in turn shapes institutions. Our empirical evidence lends considerable support to this hypothesis.
Companies and the Rise of Economic Thought: The Institutional Foundations of Early Economics in England, 1550–1720
Emily Erikson & Mark Hamilton
American Journal of Sociology, July 2018, Pages 111-149
Abstract:
Seventeenth-century England was the site of a profound transformation of early economic thought on both qualitative and quantitative dimensions. The authors show that the proliferation of the chartered company in a context of low state representation of merchants played an important role in this shift. They outline the mechanisms through which chartered companies affected publication rates and provide systematic evidence of the impact of companies and state representation with a time-series analysis of the period from 1550 to 1720. The authors supplement this analysis with data on author biographies and the changing contents of the works. The results are consistent in supporting the importance of the chartered company in prompting the new discourse on economics and suggest a new appreciation of the role of corporatism in stimulating both economic discourse and the early expansion of the public sphere in England.
Religious change preceded economic change in the 20th century
Damian Ruck, Alexander Bentley & Daniel Lawson
Science Advances, July 2018
Abstract:
The decline in the everyday importance of religion with economic development is a well-known correlation, but which phenomenon comes first? Using unsupervised factor analysis and a birth cohort approach to create a retrospective time series, we present 100-year time series of secularization in different nations, derived from recent global values surveys, which we compare by decade to historical gross domestic product figures in those nations. We find evidence that a rise in secularization generally has preceded economic growth over the past century. Our multilevel, time-lagged regressions also indicate that tolerance for individual rights predicted 20th century economic growth even better than secularization. These findings hold when we control for education and shared cultural heritage.
Intelligence in the People's Republic of China
Mingrui Wang & Richard Lynn
Personality and Individual Differences, November 2018, Pages 275-277
Abstract:
Data are reported for intelligence of children in China assessed by the Combined Raven's Test in 1988, 1996 and 2006. The IQ of the samples increased by 15.0 IQ points over 18-year period. The British IQ of China in 1988 and 2006 is estimated as 94.8 and 109.8, respectively.
Democracy and Financial Crisis
Phillip Lipscy
International Organization, forthcoming
Abstract:
Existing scholarship attributes various political and economic advantages to democratic governance. These advantages may make more democratic countries prone to financial crises. Democracy is characterized by constraints on executive authority, accountability through free and fair elections, protections for civil liberties, and large winning coalitions. These characteristics bring important benefits, but they can also have unintended consequences that increase the likelihood of financial instability and crises. Using data covering the past two centuries, I demonstrate a strong relationship between democracy and financial crisis onset: on average, democracies are about twice as likely to experience a crisis as autocracies. This is an empirical regularity that is robust across a wide range of model specifications and time periods.
Risky business: Linking Toxoplasma gondii infection and entrepreneurship behaviours across individuals and countries
Stefanie Johnson et al.
Proceedings of the Royal Society: Biological Sciences, 25 July 2018
Abstract:
Disciplines such as business and economics often rely on the assumption of rationality when explaining complex human behaviours. However, growing evidence suggests that behaviour may concurrently be influenced by infectious microorganisms. The protozoan Toxoplasma gondii infects an estimated 2 billion people worldwide and has been linked to behavioural alterations in humans and other vertebrates. Here we integrate primary data from college students and business professionals with national-level information on cultural attitudes towards business to test the hypothesis that T. gondii infection influences individual- as well as societal-scale entrepreneurship activities. Using a saliva-based assay, we found that students (n = 1495) who tested IgG positive for T. gondii exposure were 1.4× more likely to major in business and 1.7× more likely to have an emphasis in ‘management and entrepreneurship' over other business-related emphases. Among professionals attending entrepreneurship events, T. gondii-positive individuals were 1.8× more likely to have started their own business compared with other attendees (n = 197). Finally, after synthesizing and combining country-level databases on T. gondii infection from the past 25 years with the Global Entrepreneurship Monitor of entrepreneurial activity, we found that infection prevalence was a consistent, positive predictor of entrepreneurial activity and intentions at the national scale, regardless of whether previously identified economic covariates were included. Nations with higher infection also had a lower fraction of respondents citing ‘fear of failure' in inhibiting new business ventures. While correlational, these results highlight the linkage between parasitic infection and complex human behaviours, including those relevant to business, entrepreneurship and economic productivity.
Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia
Alberto Alesina, Caterina Gennaioli & Stefania Lovo
Economica, forthcoming
Abstract:
This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization. To identify a causal relation, we exploit the exogenous timing of variation in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results are consistent with the literature on (under)provision of public goods in ethnically diverse societies.
Vehicle ownership restrictions and fertility in Beijing
Antung Liu et al.
Journal of Development Economics, November 2018, Pages 85-96
Abstract:
This paper studies the effects of vehicle ownership restrictions on fertility. We examine Beijing's license plate lottery system, which began in 2011 and restricts the number of new and used vehicles people can obtain. Leveraging a randomized survey, we show that one unintended consequence of the vehicle restrictions has been to reduce the number of births in the households of lottery entrants between 2011 and 2014. The vehicle restrictions reduce births in households of lottery participants by 35 percent, implying a remarkable 6 percent reduction in births across the entire city. We report changes in household structure and age composition consistent with this change in births.
Economic and Non-Economic Factors in Violence: Evidence from Organized Crime, Suicides and Climate in Mexico
Ceren Baysan et al.
NBER Working Paper, August 2018
Abstract:
Organized intergroup violence is almost universally modeled as a calculated act motivated by economic factors. In contrast, it is generally assumed that non-economic factors, such as an individual's emotional state, play a role in many types of interpersonal violence, such as "crimes of passion." We ask whether economic or non-economic factors better explain the well-established relationship between temperature and violence in a unique context where intergroup killings by drug-trafficking organizations (DTOs) and "normal" interpersonal homicides are separately documented. A constellation of evidence, including the limited influence of a cash transfer program as well as comparison with both non-violent DTO crime and suicides, indicate that economic factors only partially explain the observed relationship between temperature and violence. We argue that non-economic psychological and physiological factors that are affected by temperature, modeled here as a "taste for violence," likely play an important role in causing both interpersonal and intergroup violence.
The growth effect of democracy and technology: An industry disaggregated approach
Izaskun Zuazu
European Journal of Political Economy, forthcoming
Abstract:
The theoretical and empirical sides of democracy-growth literature fail to offer a consensus on the impact of democracy on growth. This paper provides a disaggregated manufacturing approach that reveals different effects of democracy across industries within countries. I surmise that the interplay between democracy and technological development is crucial to the economic performance of industries. A panel dataset of 61 manufacturing industries from 72 countries between 1990 and 2010 is employed, along with a wide variety of democracy measures. The results point to a technologically-conditioned effect of democracy. Political regime changes towards democracy are growth-enhancing for industries close to the World Technology Frontier but have a negative effect on backward industries. This evidence is robust to specification changes and alternative estimation techniques, and prevails once the possible dynamics of manufacturing growth are tackled.
Long-term exposure to malaria and violence in Africa
Matteo Cervellati et al.
Economic Policy, July 2018, Pages 403–446
Abstract:
This paper explores the existence of a link between the long-term exposure to malaria and the frequency of civil conflicts in Africa. Using geographically disaggregated data at the level of grid cells the analysis provides empirical evidence for a hump-shaped relationship between the long-run stability and force of malaria transmission and the incidence of civil violence. In line with epidemiological predictions about the acquired immunity to malaria, cells that are characterized by intermediate malaria exposure exhibit higher conflict incidence than cells with very low or very high malaria exposure. We explore the role of the expansion of anti-malaria policies after 2005 in the context of the Roll Back Malaria programme. The results provide suggestive evidence that anti-malaria interventions reduced the incidence of civil violence, but only in areas where adults lack acquired immunity to malaria.
Some Misconceptions About Public Investment Efficiency and Growth
Andrew Berg et al.
Economica, forthcoming
Abstract:
We reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. We show that in standard neoclassical and endogenous growth models, increases in public investment spending in inefficient countries do not generally have a lower impact on growth than in efficient countries. This apparently counterintuitive result, which contrasts with earlier papers and policy analyses, follows from the standard assumption that the marginal product of public capital declines with the capital/output ratio. The implication is that efficiency and scarcity of public capital are likely to be inversely related across countries. Both efficiency and the rate of return thus need to be considered together in assessing the impact of increases in investment, and blanket recommendations against increased public investment spending in inefficient countries need to be rethought.
Who does better for the economy? Presidents versus parliamentary democracies
Richard McManus & Gulcin Ozkan
Public Choice, September 2018, Pages 361–387
Abstract:
Are certain forms of government associated with superior economic outcomes? This paper attempts to answer that question by examining how government systems influence macroeconomic performance. We find that presidential regimes consistently are associated with less favorable outcomes than parliamentary regimes: slower output growth, higher and more volatile inflation and greater income inequality. Moreover, the magnitude of the effect is sizable. For example, annual output growth is between 0.6 and 1.2 percentage points lower and inflation is estimated to be at least four percentage points higher under presidential regimes relative to those under parliamentary ones. The difference in distributional outcomes is even starker; income inequality is 12 to 24% worse under presidential systems.
World Bank Policy Lending and the Quality of Public-Sector Governance
Lodewijk Smets & Stephen Knack
Economic Development and Cultural Change, forthcoming
Abstract:
In this study, we investigate the impact of World Bank development policy lending for public-sector governance (PSG) on the quality of public-sector management and institutions. We measure the latter using the World Bank’s Country Policy and Institutional Assessments (CPIA) and consider only policy conditions targeted at improvements in those areas. Using a comprehensive country-year panel data set of aid-receiving countries, we find a significant concave effect of public-sector conditions on the quality of PSG. These findings are robust to the use of alternative measures of PSG and to lagging the variable of interest by 4 periods. Further evidence is provided by employing sample restrictions, adding more controls, and estimating a dynamic model with generalized method of moments (difference GMM). The optimal number of conditions estimated by our preferred GMM specification is 107, where the predicted policy score is about 0.96 points (1.33 SD) higher than with zero conditions. We show that conditions related to public financial management are more effective than those related to anticorruption or civil service and administrative reform, where progress requires changing the behavior of a larger set of deconcentrated actors. We also find evidence that the impact of PSG lending is larger in democracies than in nondemocracies. We conclude by describing some innovative ideas in the Bank’s ambitious new public-sector management strategy that could improve effectiveness of its support for public-sector governance reform.
Corruption and Sensitive Soccer Games: Cross-Country Evidence
Guy Elaad, Alex Krumer & Jeffrey Kantor
Journal of Law, Economics, and Organization, forthcoming
Abstract:
We utilize data from sensitive soccer games in 75 countries between the years 2001 and 2013. In these games one team was in immediate danger of relegation to a lower division (Team A) and another team was not affected by the result (Team B). Using within-country variation, our difference-in-difference analysis reveals that the more corrupt the country, according to Corruption Perceptions Index, the higher is the probability that Team A would achieve the desired result in the sensitive games relative to achieving this result in other, non-sensitive games against the same team. We also find that in the later stages of the following year, the probability that Team A would lose against Team B compared to losing against a similar team (usually better than Team B) is significantly higher in more corrupt countries than in less corrupt countries. This result serves as evidence of quid pro quo behavior.
Time use impacts of rural electrification: Longitudinal evidence from Guatemala
Louise Grogan
Journal of Development Economics, November 2018, Pages 304-317
Abstract:
This paper examines how obtaining a household electric connection affects the time allocation of rural, indigenous Guatemalans during 2000–2011. Following the end of a thirty-six year civil war, a Rural Electrification Plan substantially expanded electricity access, and subsidized use. This public-private partnership pays companies a fixed fee for connecting households. Causal impacts on time use of individuals are identified using initial geospatial inequalities in public goods provisions within municipalities and this large change in the cost of electrifying households more distant from the electric grid. Women increased time spent working for money by about 2–3 h per day.