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

2. 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

3. Acemoglu, Johnson, Robinson (2001)
Economics 172

4. 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

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

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

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

8. Economics 172

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

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

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

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

13. Omitted variable bias in OLS
Economics 172

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

15. 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 E(Xi | Ti=0) + E(ei | Ti=0)]
= b + c [E(Xi | Ti=1) – E(Xi | Ti=0)]
Economics 172

16. Omitted variable bias in OLS
Economics 172

17. For next time: Read Miguel (2005)
Economics 172

18. Whiteboard #1
Economics 172

19. Whiteboard #2
Economics 172

20. Whiteboard #3
Economics 172

21. Whiteboard #4
Economics 172

22. Whiteboard #5
Economics 172

23. Map of Africa
Economics 172