Submitted Papers
The Welfare Cost of Lawlessness: Evidence from Somali Piracy
joint with Tim Besley and Hannes-Felix Mueller.
Abstract: Establishing the rule of law is now widely regarded to be central to properly functioning economies. However, little is known about the cost of law and order break- downs. This paper studies a specific context of this by estimating the effect of Somali piracy attacks on shipping costs using data on shipping contracts in the dry bulk mar- ket. To estimate a treatment effect, we look at shipping routes whose shortest path exposes them to piracy and find that the increase in attacks in 2008 lead to around a 8 to 12 percent increase in costs. From this we calculate the welfare loss imposed by piracy. We estimate that generating around 120 USD million of revenue for Somali pirates led to a welfare loss of at least 900 USD million, making piracy an expensive way of making transfers.
Download the paper here.
Media coverage
- Financial Times, Tim Hartford, Lessons for pirates – from tax collectors, 18.01.2013.
- Foreign Policy, Paul Collier, It’s Lonely Being No. 1 – Is there hope for Somalia?, 18.06.2012.
Market Structure and Borrower Welfare in Microfinance
joint with Jon de Quidt and Maitreesh Ghatak.
Abstract: Motivated by recent controversies surrounding the role of commercial lenders in microfinance, we analyze borrower welfare under different market structures, considering a benevolent non-profi lender, a for-profit monopolist, and a competitive credit market. To understand the magnitude of the effects analyzed, we simulate the model with parameters estimated from the MIX Market database. Our results suggest that market power can have severe implications for borrower welfare, while despite possible information frictions competition typically delivers similar borrower welfare to non-profit lending. In addition, for-profit lenders are less likely to use joint liability than non-profits.
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Work in Progress
Group Lending Without Joint Liability
joint with Jon de Quidt and Maitreesh Ghatak.
Abstract: This paper contrasts individual liability lending with and without groups to joint liability lending. By doing so, we shed light on an apparent shift away from joint liability lending towards individual liability lending. We show that individual lending with or without groups may constitute a welfare improvement so long as borrowers have sufficient social capital to sustain mutual insurance. Secondly, we explore how a purely mechanical argument in favour of the use of groups – namely lower transaction costs – may actually be used explicitly by lenders to encourage the creation of social capital.
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Developing a Micro-Level Conflict Data Set for South Asia
Abstract: This paper describes the use of sophisticated natural language processing tools to develop a district-level conflict dataset for South Asia, with a particular focus on India. The methodology used requires only a limited amount of work of hand-coding data. As the procedure is objective, erroneous coding of data by researchers can be avoided or at least limited, using such automation techniques. The ideal combination would leverage human ability to discover nuances in textual notions, with the scalability and objectivity of automated procedures. I then show how the dataset correlates with the Global Terrorism Database (GTD), another major conflict database measuring terrorist or insurgency violence. I highlight that there appear to be systematic differences between these two datasets. These differences likely arise from the primary data sources that feed into the GTD.
Do Rural Income Shocks increase Crime in Indian cities?
joint with Benjamin Guin