The Lost Returns to Diversity Suppressed

How much have oppressive norms been hurting US growth?

In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given that innate talent for these professions is unlikely to differ across groups, the occupational distribution in 1960 suggests that a substantial pool of innately talented black men, black women, and white women were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the remarkable convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. About one-quarter of growth in aggregate output per person over this period can be explained by the improved allocation of talent.

The paper is "The Allocation of Talent and U.S. Economic Growth" by Chang-Tai Hsieh and coauthors. 

"Four dozen papers on conflict and fragility in Africa in under 2,000 words"

David Evans' coverage of last month's Annual Bank Conference on Africa is a great overview of some fascinating recent applied research. Highlights:

Extreme rain and drought both boost livestock theft in Kenya: raids driven by resource scarcity but also by weather that makes it easy to carry out a raid (Ralston).

Drought leads to increased violence against women. When the shock affects income asymmetrically across partners, it is associated with violence for the first time in the marriage (Cools et al.). 

Axbard et al. use variation in international mineral prices and within-country time and geographic variation to show that when a mine opens in South Africa, crime doesn’t increase. But you may not want to be around when the mine closes. 

“Members of ethnic groups exposed to greater historical missionary activity [in 19th-century Nigeria] express significantly less trust today,” using Afrobarometer trust measures (Okoye).

Ecotourism and poverty

This is a hard problem to answer well, but its certainly an interesting question.

Quantifying causal mechanisms to determine how protected areas affect poverty through changes in ecosystem services and infrastructure
Paul J. Ferraroa and Merlin M. Hanauer

Abstract: To develop effective environmental policies, we must understand the mechanisms through which the policies affect social and envi- ronmental outcomes. Unfortunately, empirical evidence about these mechanisms is limited, and little guidance for quantifying them exists. We develop an approach to quantifying the mechanisms through which protected areas affect poverty. We focus on three mechanisms: changes in tourism and recreational services; changes in infrastructure in the form of road networks, health clinics, and schools; and changes in regulating and provisioning ecosystem services and foregone production activities that arise from land- use restrictions. The contributions of ecotourism and other ecosys- tem services to poverty alleviation in the context of a real environ- mental program have not yet been empirically estimated. Nearly two-thirds of the poverty reduction associated with the establish- ment of Costa Rican protected areas is causally attributable to opportunities afforded by tourism. Although protected areas reduced deforestation and increased regrowth, these land cover changes neither reduced nor exacerbated poverty, on average. Protected areas did not, on average, affect our measures of in- frastructure and thus did not contribute to poverty reduction through this mechanism. We attribute the remaining poverty reduction to unobserved dimensions of our mechanisms or to other mecha- nisms. Our study empirically estimates previously unidentified contributions of ecotourism and other ecosystem services to pov- erty alleviation in the context of a real environmental program. We demonstrate that, with existing data and appropriate empiri- cal methods, conservation scientists and policymakers can begin to elucidate the mechanisms through which ecosystem conservation programs affect human welfare.

The Hidden Impact of Filipino Typhoons at BIDS

Jesse recently posted on our results for the economic and health impact of typhoons in the Philippines.  But in case you're feeling too lazy to read that whole post, here's the results in 4 min of video. It was a "lightning" talk at the launch of the Berkeley Institute for Data Science.

Year of Reviews in Review: The New Environment and Development Literature

Amir Jina and I were recently discussing the multiple literature reviews that have come out on environment and development topics lately, and realized that there were so many we were starting to lose track. To that end, and as a service to those of you who aren't constantly trawling the working paper and journal lists, here's a quick rundown of the over ten (and counting) recent literature reviews that have come out in the newly emerging environment and development literature:

• Dell, Jones, and Olken's "What Do We Learn from the Weather? The New Climate-Economy Literature". Reviews the growing number of papers focusing on climate and weather impacts, and provides conceptual guidelines for using these results in IAMs and similar models.
• Greenstone and Jack's "Envirodevonomics". Explores low valuation of environmental quality in developing contexts, proposes four basic mechanisms through which this might occur, and reviews the environment and development literature in search of relevant evidence.
• Zivin and Neidell's "Environment, Health, and Human Capital". Highlights economists' main contributions to our understanding of the relationship between the environment and human health, and reviews the applied micro literature on pollution exposure.
• Kousky's "Informing climate adaptation: A review of the economic costs of natural disasters" (ungated RFF working paper here). Reviews the empirical literature on disaster impacts with an eye towards informing the adaptation literature.
• Hsiang, Burke, and Miguel's "Quantifying the Influence of Climate on Human Conflict" (ungated version here). Metanalysis of the climate and conflict literature documenting a general relationship between climate fluctuations and conflict across both spatial and temporal scales. Accompanying review article is Hsiang and Burke's "Climate, Conflict and Social Stability: what does the evidence say?"
• Currie, Zivin, Mullins, and Neidell's "What Do We Know About Short and Long Term Effects of Early Life Exposure to Pollution?". Provides a conceptual model and reviews the empirical literature on the effects of early life pollution exposure.
• Auffhammer and Mansur's "Measuring Climatic Impacts on Energy Expenditures: A Review of the Empirical Literature". Overview of the empirical literature on climate fluctuations as a driver of energy demand.
• Auffhammer and Schlenker's "Empirical Studies on Agricultural Impacts and Adaptation" (forthcoming). Reviews the growing ag-climate literature and the empirical adaptation literature that has come from it.
• Deschênes' "Temperature, Human Health, and Adaptation: A Review of the Empirical Literature". Outlines conceptual issues related to deducing empirical relationships between temperature and health and overviews relevant literature with an eye towards informing IAMs.
• Almond and Currie's "Killing Me Softly: The Fetal Origins Hypothesis". Provides an overview of the explosion of literature on fetal origins / in-utero impacts on latter life outcomes that has emerged in the last decade. 
• Auffhammer, Hsiang, Schlenker and Sobel's "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change"provides a review of methods and issues associated with researching climate and its impact on social systems.
• Pattanyak and Pfaff's "Behavior, Environment, and Health in Developing Countries: Evaluation and  Valuation" surveys the literature on the interaction between household behavior and environmental health problems and comes up with four generalizable policy pathways

Destruction, Disinvestment, and Death: Economic and Human Losses Following Environmental Disaster

Typhoon Haiyan as seen from space, Copyright 2013 JMA/EUMETSAT

Last spring Sol and I finished up the working paper version of our paper "Destruction, Disinvestment, and Death: Economic and Human Losses Following Environmental Disaster." Since the paper is long and fairly technical, we decided it would be worthwhile to do a shorter, more general-audience-appropriate piece for the blog, something that seems especially relevant given Typhoon Haiyan's devastating landfall this past weekend. If you'd like to take a look at the paper itself, you can find a copy of it here on SSRN; a copy of the supplemental appendix can be found here.

The motivation for "Destruction, Disinvestment, and Death" stems from the fact that we actually know surprisingly little about how people fare in the wake of natural disasters.

Envirodevonomics

There's a new working paper by Michael Greenstone and Kelsey Jack that's of obvious interest to FE readers:

Envirodevonomics: A Research Agenda for a Young Field
Environmental quality in many developing countries is poor and generates substantial health and productivity costs. However, existing measures of willingness to pay for environmental quality improvements indicate low valuations by affected households. This paper argues that this seeming paradox is the central puzzle at the intersection of environmental and development economics: Given poor environmental quality and high health burdens in developing countries, why is WTP so low? We develop a conceptual framework for understanding this puzzle and propose four potential explanations: (1) due to low income levels, individuals value increases in income more than marginal improvements in environmental quality, (2) the marginal costs of environmental quality improvements are high, (3) political economy factors undermine efficient policy-making, and (4) market failures such as weak property rights and missing capital markets drive a wedge between true and revealed willingness to pay for environmental quality. We review the available literature on each explanation and discuss how the framework also applies to climate change, which is perhaps the most important issue at the intersection of environment and development economics. The paper concludes with a list of promising and unanswered research questions for the emerging sub-field of “envirodevonomics.”

New GIS Data for the Demographic and Health Surveys

USAID's Measure Demographic and Health Surveys (DHS) are an extraordinary (free) data set on maternal and child health from around the world. They've just released their new spatial data repository which, among other things, adds crucial shape files of subnational region borders over time. From the official announcement:

We are pleased to announce the launch of a new open data GIS resource from MEASURE DHS.                                                                          

The Spatial Data Repository provides geographically-linked health and demographic data from the MEASURE Demographic and Health Surveys (DHS) project and the U.S. Census Bureau for mapping in a geographic information system (GIS).

-Boundaries of DHS regions can be explored to visualize change over time.

-Data from DHS indicators and U.S. Census population estimates can be downloaded in GIS format.

Please share with your colleagues and friends.

Go explore!  http://spatialdata.measuredhs.com/

Global Poverty and Practice Postdoctoral Fellows at Berkeley

Blum Center for Developing Economies has a now program for Global Poverty and Practice Post Doctoral Fellows.

(Applications deadline = July 15)

The Long Term Impacts of Child Sponsorship

 Figure 1a: Hopefulness, 93rd percentile

A few weeks ago the economics blogs and popular press picked up a forthcoming JPE paper on child sponsorship by Bruce Wydick (also in the economics department here at USF), Paul Glewwe, and Laine Rutledge. The paper uses a clever identification strategy involving age-eligibility rules and sibling order to isolate the effect of charity child sponsorship on adult outcomes, and finds extraordinarily large positive effects on everything ranging from educational attainment to income to civil engagement. You can find an ungated version of the paper here.

This Weekend: Pacific Conference for Development Economics 2013

If you're in the Bay Area this weekend the Pacific Conference for Development Economics (PAC-DEV) will be taking place on Saturday at San Francisco State University. The website and schedule are here. Among many great looking talks are the following which might be of particular interest to FE readers:

• "Conditional Cash Transfers and Civil Conflict: Experimental Evidence from the Philippines"- Benjamin Crost (CU Denver)
• "Colonial Investments and Long-Term Development in Africa: Evidence from Ghanaian Railroads" - Alexander Moradi (Sussex)
• "Flood-tolerant rice expected to decrease yield variability, especially for socially disadvantaged groups in India" - Kyle Emerick (UC Berkeley)
• "The Effectiveness of Environmental Alerts: Evidence from Santiago, Chile" - Jamie Mullins (UCSD)
• "Heat Waves at Conception and Later Life Outcomes" - Joshua Wilde (South Florida)
• "Farmer Crop Choice and Short-Run Weather Expectations" - Benjamin Miller (UCSD)
• "Ethnic Favoritism" - Edward Miguel (UC Berkeley)
• "The Impact of Microinsurance on Asset Accumulation and Human Capital Investments: Evidence from a Drought in Kenya" - Sarah Janzen (UC Davis)

I'll be presenting the condensed version of Sol and my Filipino typhoons paper, in the disasters session at end of day, and chairing the Politics and Outcomes session immediately before. Drop by and say hi if you're around.

Implementation capacity matters when scaling up

Paul Niehaus was presenting at USF's seminar yesterday and mentioned the following working paper by Bold, Kimenyi, Mwabu, Ng'ang'a and Sandefur:

Interventions & Institutions: Experimental Evidence on Scaling up Education Reforms in Kenya

Abstract: The recent wave of randomized trials in development economics has provoked criticisms regarding external validity and the neglect of political economy. We investigate these concerns in a randomized trial designed to assess the prospects for scaling-up a contract teacher intervention in Kenya, previously shown to raise test scores for primary students in Western Kenya and various locations in India. The intervention was implemented in parallel in all eight Kenyan provinces by a non-governmental organization (NGO) and the Kenyan government. Institutional di erences had large e ffects on contract teacher performance. We find a signifi cant, positive eff ect of 0.19 standard deviations on math and English scores in schools randomly assigned to NGO implementation, and zero eff ect in schools receiving contract teachers from the Ministry of Education. We discuss political economy factors underlying this disparity, and suggest the need for future work on scaling up proven interventions to work within public sector institutions.

 The paper is openly hosted here, and the Center for Global Development has an interview with Sandefur here. The introduction to the paper gives a particular succinct summary of its motivation:

The recent wave of randomized trials in development economics has catalogued a number of cost-eff ective, small-scale interventions proven to improve learning, health, and other welfare outcomes. This methodology has also provoked a number of criticisms regarding the generalizability of experimental findings, including concerns about external validity, general equilibrium eff ects, and the neglect of political economy in much of the evaluation literature (Acemoglu 2010, Deaton 2010, Heckman 1991, Rodrik 2009). These criticisms are particularly relevant when randomized trials of pilot projects run by well-organized and monitored NGOs are used as the basis for policy prescriptions at the national or global level. As noted by Banerjee and Duflo (2008), what distinguishes possible partners for randomized evaluations is competence and a willingness to implement projects as planned. These may be lost when the project scales up. [. . . ] Not enough e ffort has taken place so far in trying `medium scale' evaluation of programs that have been successful on a small scale, where these implementation issues would become evident." 

In this paper we employ the methodology of randomized trials to assess these substantive concerns about political and institutional constraints and measure precisely how treatment eff ects change when scaling up...

Endogenous Literacy and One Laptop Per Child

There's a famous paper in development economics by Ted Miguel and Michael Kremer called "The Illusion of Sustainability" (ungated copy here). In it, Miguel and Kremer look at an initially incredibly cost-effective intervention (deworming, original paper here) and examine whether the one-time intervention could be made "sustainable," i.e., whether the local community would continue to support the deworming program. They test three separate techniques that have been widely advocated as means of making interventions self-sustaining (cost recovery, health education, and a social psych "commitment" technique) and find that all fail. The paper is an excellent piece of evidence whenever someone brings up pie-in-the-sky "this will pay for itself in the long run and we won't need to pay operating costs!" -type arguments.

Which is why I was so surprised to come across this article over at MIT's technology review:

Given Tablets but No Teachers, Ethiopian Children Teach Themselves
With 100 million first-grade-aged children worldwide having no access to schooling, the One Laptop Per Child organization is trying something new in two remote Ethiopian villages—simply dropping off tablet computers with preloaded programs and seeing what happens. 

[...] 

The experiment is being done in two isolated rural villages with about 20 first-grade-aged children each, about 50 miles from Addis Ababa. One village is called Wonchi, on the rim of a volcanic crater at 11,000 feet; the other is called Wolonchete, in the Great Rift Valley. Children there had never previously seen printed materials, road signs, or even packaging that had words on them, Negroponte said.  

Earlier this year, OLPC workers dropped off closed boxes containing the tablets, taped shut, with no instruction. “I thought the kids would play with the boxes. Within four minutes, one kid not only opened the box, found the on-off switch … powered it up. Within five days, they were using 47 apps per child, per day. Within two weeks, they were singing ABC songs in the village, and within five months, they had hacked Android,” Negroponte said. “Some idiot in our organization or in the Media Lab had disabled the camera, and they figured out the camera, and had hacked Android.”  

Elaborating later on Negroponte’s hacking comment, Ed McNierney, OLPC’s chief technology officer, said that the kids had gotten around OLPC’s effort to freeze desktop settings. “The kids had completely customized the desktop—so every kids’ tablet looked different. We had installed software to prevent them from doing that,” McNierney said. “And the fact they worked around it was clearly the kind of creativity, the kind of inquiry, the kind of discovery that we think is essential to learning.”  

“If they can learn to read, then they can read to learn,” Negroponte said.

I'm not quite sure how settled I am in my thinking about this (first thought: IRB), but as an idea it's fascinating, and reminds me a bit about the old saw that "if marginal productivity is declining, returns to capital investments in developing countries should be stratospherically high." Perhaps that statement, which seems not to hold true for physical capital, is truer for human capital, and this may be the small investment that's needed. If your first thought is "that's not a small investment," may I direct your attention to the end of the article:

The idea of dropping off tablets outside of the context of schools is a new paradigm for OLPC. Through the late 2000s, the company was focused on delivering a custom miniaturized and ruggedized laptop, the XO, of which about 3 million have been distributed to kids in 40 countries. 

Giving computers directly to poor kids without any instruction is even more ambitious than OLPC’s earlier pushes.“What can we do for these 100 million kids around the world who don’t go to school?” McNierney said. “Can we give them tool to read and learn—without having to provide schools and teachers and textbooks and all that?”

Quality school systems are not cheap compared to tablet PCs.

Sibling externalities in the marriage market

I have weddings on the brain since my lovely fiance and I are planning ours this year, so I thought it would be nice to do a "marriage series" of posts on FE. Here's the first installment.

Lately, I've been thinking about whether we can empirically measure the long-run effect (on HH capital) of spending lots of money on expensive weddings, reminding me of this recent paper on the potentially long-run effects of sibling competition in the marriage market.

Marriage Institutions and Sibling Competition: Evidence from South Asia
Tom Vogl

Using data from South Asia, this paper examines how arranged marriage cultivates rivalry among sisters. During marriage search, parents with multiple daughters reduce the reservation quality for an older daughter's groom, rushing her marriage to allow sufficient time to marry off her younger sisters. Relative to younger brothers, younger sisters increase a girl’s marriage risk; relative to younger singleton sisters, younger twin sisters have the same effect. These effects intensify in marriage markets with lower sex ratios or greater parental involvement in marriage arrangements. In contrast, older sisters delay a girl’s marriage. Because girls leave school when they marry and face limited earnings opportunities when they reach adulthood, the number of sisters has well-being consequences over the lifecycle. Younger sisters cause earlier school-leaving, lower literacy, a match to a husband with less education and a less-skilled occupation, and (marginally) lower adult economic status. Data from a broader set of countries indicate that these cross-sister pressures on marriage age are common throughout the developing world, although the schooling costs vary by setting.

Attention is a scarce resource

I think this is important in many contexts (not just farming). For example, to harp on some of our recent themes, I don't think that most people are aware of how much their productivity falls when their temperature rises or how much quicker they are to anger when their environment is uncomfortable. My guess is that most people know that these kinds of things are issues, in some sort of qualitative story-like sense, but that they don't have any idea about the quantitative size of the effect -- and they certainly don't optimize their lifestyle by taking these things into account.

In an example I was just mentioning to a colleague: I was recently trying to sell two air-conditioning units to students from my PhD program (most of whom know about my work on temperature and productivity). At $50 a unit, buying one of these as an investment would have paid for itself in productivity after one or two hot days.  But I couldn't sell the ACs until I dropped the price and just gave them away!  Despite knowing that it will dramatically improve their productivity, even students trained to think about these problems will make mistakes in the optimization of their lifestyle. (Although, it's also possible that in this case the students were colluding to get me to lower the price...) Enough editorializing, here's the paper:

LEARNING THROUGH NOTICING: THEORY AND EXPERIMENTAL EVIDENCE IN FARMING
Rema Hanna, Sendhil Mullainathan, Joshua Schwartzstein

ABSTRACT: Existing learning models attribute failures to learn to a lack of data. We model a different barrier. Given the large number of dimensions one could focus on when using a technology, people may fail to learn because they failed to notice important features of the data they possess. We conduct a field experiment with seaweed farmers to test a model of “learning through noticing”. We find evidence of a failure to notice: On some dimensions, farmers do not even know the value of their own input. Interestingly, trials show that these dimensions are the ones that farmers fail to optimize. Furthermore, consistent with the model, we find that simply having access to the experimental data does not induce learning. Instead, farmers change behavior only when presented with summaries that highlight the overlooked dimensions. We also draw out the implications of learning through noticing for technology adoption, agricultural extension, and the meaning of human capital.

"Our results add to an emerging literature that documents very high rates of return to small capital investments in developing countries"

Mushfiq Mobarak presented at the Columbia Sustainable Development seminar on Monday, and while I couldn't be there the paper (pdf here) seemed worth passing on:

Seasonal Migration and Risk Aversion 

Gharad Bryan, Shyamal Chowdhury, A. Mushfiq Mobarak 

Abstract: Pre-harvest lean seasons are widespread in the agrarian areas of Asia and Sub-Saharan Africa.  Every year, these seasonal famines force millions of people to succumb to poverty and hunger.  We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts.  The incentive induces 22% of households to send a seasonal migrant, consumption at the origin increases by 30% (550-700 calories per person per day) for the family members of induced migrants, and follow-up data show that treated households continue to re-migrate at a higher rate after the incentive is removed.  The migration rate is 10 percentage points higher in treatment areas a year later, and three years later it is still 8 percentage points higher. These facts can be explained by a model with three key elements: (a) experimenting with the new activity is risky, given uncertain prospects at the destination, (b) overcoming the risk requires individual-specific learning (e.g. resolving the uncertainty about matching to an employer), and (c) some migrants are close to subsistence and the risk of failure is very costly. We test a model with these features by examining heterogeneity in take-up and re-migration, and by conducting a new experiment with a migration insurance treatment.  We document several pieces of evidence consistent with the model.   

Yes, that's $8.50 and 550-700 calories per person per day for family members.

Diarrhoea in Bangladesh: displaying results from fixed effects models

I ran into this 2008 paper doing hurricane work with Jesse. The results are not extremely surprising, but I really liked how they displayed their result.  Many of us use high-dimensional data and multiple regression models to try and account for the many different processes that occur in social data, but it is often difficult to clearly display the effect of just one process while also being clear about all the other controls in the model. I like the approach of this team: they show predictions form the complex model (eg. with week and month fixed effects, socioeconomic controls, etc.) overlaid with the real data.


Factors determining vulnerability to diarrhoea during and after severe floods in Bangladesh
Masahiro Hashizume, Yukiko Wagatsuma, Abu S. G. Faruque, Taiichi Hayashi, Paul R. Hunter, Ben Armstrong and David A. Sack

Abstract: This paper identifies groups vulnerable to the effect of flooding on hospital visits due to diarrhoea during and after a flood event in 1998 in Dhaka, Bangladesh. The number of observed cases of cholera and non-cholera diarrhoea per week was compared to expected normal numbers during the flood and post-flood periods, obtained as the season-specific average over the two preceding and subsequent years using Poisson generalised linear models. The expected number of diarrhoea cases was estimated in separate models for each category of potential modifying factors: sex, age, socio-economic status and hygiene and sanitation practices. During the flood, the number of cholera and non-cholera diarrhoea cases was almost six and two times higher than expected, respectively. In the post-flood period, the risk of non-cholera diarrhoea was significantly higher for those with lower educational level, living in a household with a non- concrete roof, drinking tube-well water (vs. tap water), using a distant water source and unsanitary toilets. The risk for cholera was significantly higher for those drinking tube-well water and those using unsanitary toilets. This study confirms that low socio-economic groups and poor hygiene and sanitation groups were most vulnerable to flood-related diarrhoea.

Disease and Development: Some Notable Recent Findings

[This is a guest post by first year students in Columbia's Sustainable Development program]

As part of their coursework for the Human Ecology course, first years in Columbia's Sustainable Development Ph.D. program (and a few select students from the SIPA Masters programs) were asked to put together reviews of recently active areas of the broad environment/development literature. Anna Tompsett, the course's TA and sometimes guest blogger on FE, has asked the students permission to share them with us, so over the next two weeks we'll be posting them, starting with today's on disease and development. Enjoy! 

Disease and Development: Some Notable Recent Findings

by Kimberly Lai, Habtamu Fuje and Clarissa Santelmo

One of the most formidable impediments to sustainable development in low-income countries is disease. In an attempt to offer a rough sketch of the current state of research in this realm, we canvassed the past year’s worth of issues of three major journals—Nature, Lancet, and the New England Journal of Medicine—and picked out six articles that we found particularly relevant to disease, development, and global health policy.

We were especially interested in health issues that rate among the World Health Organization’s leading causes of death and global burden of disease in developing countries. (Global burden of disease measures years of healthy life lost to disability as well as death.) We selected studies based on the number of people that could benefit from the findings, out-of-sample validity (in the case of experimental studies), socioeconomic aspects, and potential policy implications.

Capital with a capital "C"

There is capital and then there is Capital. These are some interesting recent NBER papers on the latter.

Railroads and American Economic Growth: A "Market Access" Approach
Dave Donaldson and Richard Hornbeck

Abstract: This paper examines the historical impact of railroads on the American economy. Expansion of the railroad network and decreased trade costs may a ect all counties directly or indirectly, an econometric challenge in many empirical settings. However, the total impact on each county can be summarized by changes in that county's "marketaccess," a reduced-form expression derived from general equilibrium trade theory. We measure counties' market access by constructing a network database of railroads and waterways and calculating lowest-cost county-to-county freight routes. As the railroad network expanded from 1870 to 1890, changes in market access are capitalized in agricultural land values with an estimated elasticity of 1.5. Removing all railroads in 1890 would decrease the total value of US agricultural land by 73% and GNP by 6.3%, more than double social saving estimates (Fogel 1964). Fogel's proposed Midwestern canals would mitigate only 8% of losses from removing railroads.

ON THE ROAD: ACCESS TO TRANSPORTATION INFRASTRUCTURE AND ECONOMIC GROWTH IN CHINA
Abhijit Banerjee, Esther Duflo, Nancy Qian

This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.

ENGINES OF GROWTH: FARM TRACTORS AND TWENTIETH-CENTURY U.S. ECONOMIC WELFARE
Richard H. Steckel and William J. White

The role of twentieth-century agricultural mechanization in changing the productivity, employment opportunities, and appearance of rural America has long been appreciated.  Less attention has been paid to the impact made by farm tractors, combines, and associated equipment on the standard of living of the U.S. population as a whole.  This paper demonstrates, through use of a detailed counterfactual analysis, that mechanization in the production of farm products increased GDP by more than 8.0 percent, using 1954 as a base year.  This result suggests that studying individual innovations can significantly increase our understanding of the nature of economic growth.

The effect of life expectancy on human capital investments

Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease
Emily Oster, Ira Shoulson, E. Ray Dorsey

Abstract: One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment.  Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications.  We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease.  We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training.  We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country  differences in college enrollment.  Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.