Working Papers
Witchcraft Beliefs as a Cultural Legacy of the Atlantic Slave Trade: Evidence from Two Continents
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This paper formally examines the hypothesis that the historic slave trade contributed to the propagation of persistent witchcraft beliefs on both sides of the Atlantic. As documented in archival records and case studies, the Atlantic slave trade, a source of hardship for millions of people in Sub-Saharan Africa, was commonly perceived by the locals as a form of witchcraft, and its perpetrators were viewed as witches and cannibals. Furthermore, in response to the rising demand for slaves, witch trials became a common vehicle of supplying captives by condemning the accused individuals and their families to slavery. Consistent with these narratives, we find that representatives of ethnic groups which were more heavily exposed to the Atlantic slave trade in the past are more likely to believe in witchcraft today, thus establishing a link between historical trauma and contemporary culture. Exploring the role of the slave trade in cultural transmission across continents, we further show that Afro-descendants in Latin America are substantially more likely to believe in witchcraft relative to other racial groups. Moreover, accounting for race and other relevant factors, people residing in regions historically more reliant on African slave labor are also more likely to be witchcraft believers.
Capital-Skill Complementarity and the Emergence of Labor Emancipation
(with Quamrul Ashraf, Francesco Cinnirella, Oded Galor, and Erik Hornung)
[paper|abstract]
This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in early industrialization across regions of nineteenth-century Prussia, capital abundance is shown to have contributed to the subsequent intensity of de facto serf emancipation.
Measuring Regional Ethnolinguistic Diversity in Sub-Saharan Africa: Surveys vs. GIS
(with Diego Rivera), under review
[paper|abstract]
This paper compares two approaches to measuring subnational ethnolinguistic diversity in Sub-Saharan Africa, one based on censuses and large-scale population surveys and the other relying on the use of geographic information systems (GIS). The two approaches yield sets of regional fractionalization indices that are moderately positively correlated, with a stronger association across rural areas. These differences matter for empirical analysis: in a common sample of regions, survey-based indices of deep-rooted diversity are much more strongly negatively associated with a range of development indicators relative to their highest-quality GIS-based counterparts.
Research in Progress
Ethnicity, Religion, and Conflict: Evidence from African Regions
(with Diego Rivera)
Industrialization and Slavery in the Antebellum U.S. South
(with Quamrul Ashraf)
Reference-Point Formation, Inequality, and Social Polarization
Envy and Redistribution
Publications
Subnational Diversity in Sub-Saharan Africa: Insights from a New Dataset (with Diego Rivera)
Journal of Development Economics, July 2018, 133, pp. 231–263.
[paper|abstract|publication|replication files]
This paper presents a new dataset on subnational ethnolinguistic and religious diversity in Sub-Saharan Africa covering 36 countries and almost 400 first-level administrative units. We use population censuses and large-scale household surveys to compile detailed data on the ethnolinguistic composition of each region and match all reported ethnicities to Ethnologue, a comprehensive catalog of world languages. This matching allows us to standardize the notion of an ethnolinguistic group and account for relatedness between language pairs, a correlate of shared history and culture, when calculating diversity indices. Exploiting within-country variation provided by our new dataset, we find that local public goods provision, as reflected in metrics of education, health, and electricity access, is negatively related to ethnolinguistic diversity, but only if the underlying basic languages are first aggregated into larger families or if linguistic distances between groups are taken into consideration. In other words, only deep-rooted diversity, based on cleavages formed in the distant past, is strongly inversely associated with a range of regional development indicators. Furthermore, we show that subnational diversity has been remarkably persistent over the past two-three decades implying that population sorting in the short to medium run is unlikely to bias our main findings.
Banks, Market Organization, and Macroeconomic Performance: An Agent-Based Computational Analysis
(with Quamrul Ashraf and Peter Howitt)
Journal of Economic Behavior & Organization, March 2017, 135, pp. 143–180.
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This paper is an exploratory analysis of the role that banks play in supporting what Jevons called the "mechanism of exchange." It considers a model economy in which exchange activities are facilitated and coordinated by a self-organizing network of entrepreneurial trading firms. Collectively, these firms play the part of the Walrasian auctioneer, matching buyers with sellers and helping the economy to reach prices at which peoples' trading plans are mutually compatible. Banks affect macroeconomic performance in this economy because their lending activities facilitate the entry and influence the exit decisions of trading firms. Both entry and exit have ambiguous effects on performance, and we resort to computational analysis to understand how they are resolved. Our analysis draws an important distinction between normal and worst-case scenarios, with the economy experiencing systemic breakdowns in the latter. We show that banks can provide a "financial stabilizer" that more than counteracts the familiar financial accelerator, and that the stabilizing role of the banking system is particularly apparent in worst-case scenarios. In line with this result, we also find that under less restrictive lending standards banks are able to more effectively improve macroeconomic performance in the worst-case scenarios.
Witchcraft Beliefs and the Erosion of Social Capital: Evidence from Sub-Saharan Africa and Beyond
Journal of Development Economics, May 2016, 120, pp. 182–208.
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This paper examines the relationship between witchcraft beliefs, a deep-rooted cultural phenomenon, and various elements of social capital. Using novel survey data from nineteen countries in Sub-Saharan Africa we establish a robust negative association between the prevalence of witchcraft beliefs and multiple measures of trust which holds after accounting for country fixed effects and potential confounding factors at the individual, regional, and ethnic-group levels. This finding extends to other metrics of social capital, namely charitable giving and participation in religious group activities. Such coexistence of witchcraft beliefs and antisocial attitudes stands in stark contrast to a well-explored alternative cultural equilibrium characterized by religious prosociality. Evidence from societies beyond Africa shows that in preindustrial communities where witchcraft is believed to be an important cause of illness, mistrust and other antisocial traits are inculcated since childhood. Furthermore, second-generation immigrants in Europe originating from countries with widespread witchcraft beliefs are generally less trusting.
How Inflation Affects Macroeconomic Performance: An Agent-Based Computational Investigation
(with Quamrul Ashraf and Peter Howitt)
Macroeconomic Dynamics, March 2016, 20(2), pp. 558–581.
[paper|abstract|publication|code|replication files]
We use an agent-based computational approach to show how inflation can worsen macroeconomic performance by disrupting the mechanism of exchange in a decentralized market economy. We find that, in our model economy, increasing the trend rate of inflation above 3 percent has a substantial deleterious effect, but lowering it below 3 percent has no significant macroeconomic consequences. Our finding remains qualitatively robust to changes in parameter values and to modifications to our model that partly address the Lucas critique. Finally, we contribute a novel explanation for why cross-country regressions may fail to detect a significant negative effect of trend inflation on output even when such an effect exists in reality.
The Economic Origins of the Evil Eye Belief
Journal of Economic Behavior & Organization, February 2015, 110, pp. 119–144.
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The evil eye belief is a widespread superstition according to which people can cause harm by a mere envious glance at coveted objects or their owners. This paper argues that such belief originated and persisted as a useful heuristic under conditions in which envy was likely to trigger destructive behavior and the avoidance of other people's envy, effectively prescribed by the evil eye belief, was a proper response to that threat. We hypothesize that in weakly institutionalized societies wealth differentiation and vulnerability of productive assets were the key factors enabling envy-induced destructive behavior and contributing to the emergence and spread of the evil eye belief as a cultural defense mechanism. Evidence from small-scale preindustrial societies shows that there is indeed a robust positive association between the incidence of the belief and measures of wealth inequality, controlling for potential confounding factors such as patterns of spatial and cross-cultural diffusion and various dimensions of early economic development. Furthermore, the evil eye belief is more prevalent in agro-pastoral societies that tend to sustain higher levels of inequality and where vulnerable material wealth plays a dominant role in the subsistence economy.
The Two Sides of Envy
Journal of Economic Growth, December 2014, 19(4), pp. 407–438.
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The two sides of envy, destructive and constructive, give rise to qualitatively different equilibria, depending on the economic, institutional, and cultural environment. If investment opportunities are scarce, inequality is high, property rights are not secure, and social comparisons are strong, society is likely to be in the "fear equilibrium," in which better endowed agents underinvest in order to avoid destructive envy of the relatively poor. Otherwise, the standard "keeping up with the Joneses" competition arises, and envy is satisfied through suboptimally high efforts. Economic growth expands the production possibilities frontier and triggers an endogenous transition from one equilibrium to the other causing a qualitative shift in the relationship between envy and economic performance: envy-avoidance behavior with its adverse effect on investment paves the way to creative emulation. From a welfare perspective, better institutions and wealth redistribution that move the society away from the low-output fear equilibrium need not be Pareto improving in the short run, as they unleash the negative consumption externality. In the long run, such policies contribute to an increase in social welfare due to enhanced productivity growth.
Envy in the Process of Development: Implications for Social Relations and Conflict
Economics of Peace and Security Journal, October 2013, 8(2), pp. 13–19.
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This article examines envy as an important cultural link between inequality, institutions, development, and conflict. It argues that envy can be either a source of strife and stagnation or an engine for peaceful competition and growth. The fundamental conditions that activate the constructive side of envy and shut down its destructive side are access to productive investment opportunities, equality, security of property rights, and mild social comparisons. The dominant role of envy in society gives rise to a set of related cultural norms and beliefs that affect economic performance and social relations. While constructive envy is manifested in emulation or even envy-provocation – standard features of a consumer society – destructive envy produces a fear-of-envy culture that hampers economic incentives and creates an environment of suspicion and conflict.
Macroeconomics in a Self-Organizing Economy (with Quamrul Ashraf and Peter Howitt)
Revue de l'OFCE / Debates and policies, October 2012, 124, pp. 43–65.
[paper|abstract|publication|comments and reply]
This paper emphasizes the importance of considering the mechanisms that coordinate economic transactions in a decentralized economy, namely the role played by a self-organizing network of entrepreneurial trading firms, for theories aimed at guiding macroeconomic policy. We review a research program that aims to understand how, and how well, trading activities are coordinated in various circumstances by employing agent-based computational (ACE) models of stylized economies where these activities take place in a self-organizing network of markets created and operated by profit-seeking business firms. We discuss how such a research program can yield important policy-relevant insights, beyond those that can be offered by conventional dynamic stochastic general equilibrium (DSGE) models, into several macroeconomic phenomena including the emergence of monetary equilibria in a decentralized economy, the microfoundations of the multiplier process, the costs of a higher trend rate of inflation, and the role of the banking system in economic crises.
Book chapters
Long-Run Development and the New Cultural Economics
In Demographic Change and Long-Run Development. Edited by Matteo Cervelatti and Uwe Sunde.
Cambridge, MA: MIT Press, 2017, Chapter 9, pp. 221–261.
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This paper reviews recent economics literature on culture, with an emphasis on its relation to the field of long-run growth and development. It examines the key issues debated in the new cultural economics: causal effects of culture on economic outcomes, the origins and social costs of culture, as well as cultural transmission, persistence, and change. Some of these topics are illustrated in application to the economic analysis of envy-related culture.
Publications in Russian
Income Inequality and Economic Growth: An Empirical Survey
Ekonomicheskaya Nauka Sovremennoi Rossii, July 2009, 2, pp. 91–104.
This paper examines econometric studies of the relationship between income inequality and economic growth. The Kuznets curve is present in the data but there is an ongoing debate about its shape and relevance in explaining cross-country differences in inequality levels. Empirical works focusing on the impact of income distribution on the rate of economic growth provide ambiguous conclusions which may be caused by the problem of incorrect model specification due to nonlinearity of the relationship, its peculiarities for different groups of countries, and differences in estimation techniques.
Income Inequality and Economic Growth: A Theoretical Survey
Ekonomika i Matematicheskie Metody, April 2009, 45(2), pp. 19–30.
This paper represents a theoretical survey of models linking income inequality and economic growth. Both sides of the two-way causal relationship are examined: the impact of economic development on income distribution and the effect of inequality on subsequent growth rate. Existing theories are divided into groups according to underlying economic mechanisms and their relevance at different stages of development.
