Economics 172 Issues in African Economic Development

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Presentation transcript:

Economics 172 Issues in African Economic Development Lecture 5 January 30, 2006

Miguel (2005) – worms and education Outline: Acemoglu, Johnson, and Robinson (2001) on colonial settlement, health, and institutions Methodological issues: Omitted variable bias and randomized experiments Miguel (2005) – worms and education Economics 172

Acemoglu, Johnson, Robinson (2001) Economics 172

Acemoglu, Johnson, Robinson (2001) Their main argument: Less tropical disease  More European settlement  Better government institutions (e.g., rule of law)  Faster economic growth Economics 172

Acemoglu, Johnson, Robinson (2001) Concern: Omitted variable bias Economics 172

Acemoglu, Johnson, Robinson (2001) Concern: Omitted variable bias 1. Tropical disease Economic performance today Economics 172

Acemoglu, Johnson, Robinson (2001) Concern: Omitted variable bias 1. Tropical disease Economic performance today 2. “High potential” regions Economics 172

Economics 172

Miguel and Kremer (2004) Education is a possible channel linking health, income Poor health Lower income Economics 172

Miguel and Kremer (2004) Worms are among the world’s most prevalent diseases: Parasite # infections globally Hookworm 1.3 billion Roundworm 1.3 billion Whipworm 900 million Schistosomiasis 200 million Health and nutrition consequences Economics 172

Miguel and Kremer (2004) Transmission of worm infections is through poor hygiene and sanitation Economics 172

Miguel and Kremer (2004) Transmission of worm infections is through poor hygiene and sanitation Treatment is cheap (<US$1 per year) Economics 172

Omitted variable bias in OLS Economics 172

Omitted variable bias in OLS (1) Yi = a + bTi + cXi + ei Economics 172

Omitted variable bias in OLS (1) Yi = a + bTi + cXi + ei (2) E(Yi | T=1) – E(Yi | T=0) = [a + b + E(Xi | Ti=1) + E(ei | Ti=1)] – [a + 0 + E(Xi | Ti=0) + E(ei | Ti=0)] = b + c [E(Xi | Ti=1) – E(Xi | Ti=0)] Economics 172

Omitted variable bias in OLS Economics 172

For next time: Read Miguel (2005) Economics 172

Whiteboard #1 Economics 172

Whiteboard #2 Economics 172

Whiteboard #3 Economics 172

Whiteboard #4 Economics 172

Whiteboard #5 Economics 172

Map of Africa Economics 172