survey data of the world's poor, and look at policies that have been attempted ...
Understanding Poverty, A. Banerjee, R. Benabou, and D. Mookherjee, editors, ...
Economics 24 Development Economics Syllabus Spring 2012 Professor Sandip Sukhtankar Description A majority of the world’s population lives on less than $2/day. The goal of this course is to better understand the lives of the world’s poor. What are their lives like? Why do they remain poor? Specifically, what price distortions and market failures hinder their quest to improve their wellbeing? Is there scope for policy to help the world’s poor? We do not answer these questions with anecdotes and abstract theory. Rather, we examine detailed survey data of the world’s poor, and look at policies that have been attempted and evaluated scientifically. We consider why extreme poverty and hunger, child mortality, low-levels of education, gender inequality, environmental degradation, high fertility, and child labor are pervasive in the developing world. We also examine the economic consequences of globalization and infectious diseases such as malaria and HIV/AIDS. For each topic, we seek to understand the factors and constraints influencing decision-making in developing countries. This course requires a solid understanding of how to read and interpret statistics, as well as a basic understanding of economic principles. Economics 1 and 10 or equivalent (e.g. you have credit from registrar for Econ 1 from taking an AP class and have taken Gov 10) are required; note that you will not be able to take the class without these prerequisites (no exceptions). Economics 20 and 21 are helpful but not at all necessary. Location Classroom: • Section 9L – MWF 8:45 – 9:50, x-period: Th 9:00 – 9:50 • Section 10 – MWF 10:00 – 11:05, x-period: Th 12:00 – 12:50 Office hours: W 1-3; additional hours to be posted before exams Office location: 326 Rockefeller Hall Note: There will be no class on Friday May 18. Other changes, if any, will be notified in advance; we will most definitely be using x-periods on numerous occasions. Textbooks and Other Materials Understanding Poverty, A. Banerjee, R. Benabou, and D. Mookherjee, editors, Oxford University Press: March 2006. This is a non-technical description of research by economists on most of the topics covered in the class. Almost all of the book will be assigned. Ray, Debraj. Development Economics. Princeton University Press, 1998. This is a slightly more technical treatment of the material, and the source for almost all the formal models taught in class. We will use this book for roughly a third of the classes. An online version is now available for a significantly lower price than the printed version.
Two popular books on development economics have been published recently – Poor Economics by Abhijit Banerjee and Esther Duflo and More than Good Intentions by Dean Karlan and Jacob Appel. You do not have to purchase these books, although they are great reads – I will post required sections directly on Blackboard (books are also on reserve). Other readings – both required and recommended – are posted on Blackboard. It is expected that required reading be completed before class. Grading and assignments Class Participation + 5 Problem Sets (15%) Participation is evaluated by attendance and the student's ability to answer questions regarding the assigned readings for a class. Students are selected at random during class. Problem sets due April 6, April 13, May 4, May 11, and May 25. They will be handed out one week before due date. Mid Term Exam (25%) Will be on April 23 during class hours. Group Project and Presentations (20%) You will work in groups of 4-5 to write a 3 page experiment brief and present it to the class [May 14 and 16]; there will also be a policy debate on May 30, and a surprise presentation sometime during the term. Topics and more details will be provided during the course of the term. Cumulative Final Exam (40%) Joint Exam for both Sections, June 3, 8am-11am. There are no makeup exams. If you miss an exam, your missing grade will be replaced by an average of your other grades, adjusted for why you missed the exam or quiz. Acceptable reasons include death (yours, others), critical illness validated with a note from the appropriate dean, or a College sponsored trip. Questions about grading of any assignment or exam must be addressed within two weeks of its return. Questions must be presented in writing, and the entire assignment or exam will be regarded, which means you might end up with a lower score than you started with. Assignments are due in class. No late assignments will be accepted, no exceptions. You may work in groups for your problem sets. The problem sets will only be graded as satisfactory/ not satisfactory, and solution sets will be posted on Blackboard. I will make every attempt to respond to class-related emails within 24 hours. This policy does not apply to weekend days, so do not expect responses to emails during the weekend. I will also not respond to emails asking questions that are clearly answered on the syllabus or via prior emails: e.g. “when is the problem set due?” Students with Disabilities Students with disabilities enrolled in this course and who may need disability-related classroom accommodations are encouraged to make an appointment to see me before the end of the second week of the term [April 6]. All discussions will remain confidential, although the Student Accessibility Services office may be consulted to discuss appropriate implementation of any accommodation requested.
Course Outline All readings required except * = recommended. UP=Understanding Poverty. DE=Development Economics. PE = Poor Economics. MTGI = More than Good Intentions Note: Lecture notes and all readings not linked below will be made available on blackboard during the term. It is the students own responsibility to manage their printing of any of these documents within any budget for printing they may have. Also note that the dates given below are subject to change. 0. Statistical Background You must understand everything in DE Appendix 2 before the course begins; you don’t have to read it if you already know the concepts. You should also read the article titled “Evaluating Empirical Studies” posted on Blackboard. You might also want to read the following article which nicely explains the concept of causality: Freedman, David (1991) “Statistical Models and Shoe Leather,” Sociological Methodology, Vol. 21, pp 291-313. 1. The big picture 1.1 What is poverty? How do we measure it? [3/26] • Banerjee, A.V. and Duflo, E. (2007). The Economic Lives of the Poor. The Journal of Economic Perspectives. 21(1):141–167 • DE Ch. 2 • UP Ch 1, "Measuring Poverty" 1.2 History, Growth and Development [3/28] (Causality and instrumental variables) • UP Ch 2, "Understanding Prosperity and Poverty: Geography, Institutions, and the Reversal of Fortune" o *UP Ch 3, "Colonialism, Inequality, and Long-Run Paths of Development" o *DE Ch. 3 & 4.1-4.3 1.3 Globalization and poverty [3/30] • UP Ch 6, "Globalization and All That" • UP Ch 7, "The Global Economy and the Poor" 2. Health 2.1 Health and Nutrition: Poverty Traps [4/2] • DE Ch. 8 (esp. 8.4), Ch 13.4 2.2 Providing health services and medicines in developing countries [4/4] • PE Chapter 3: “Low-Hanging Fruit for Better (Global) Health”. • UP Ch 20, "Intellectual Property and Health in Developing Countries” • UP Ch 21, "Public Policies to Stimulate Development of Vaccines for Neglected Diseases" o *Kremer, M. (2002). "Pharmaceuticals and the Developing World," Journal of Economic Perspectives 16(4). o *Michael Kremer and Christopher Snyder, "Why is There No AIDS Vaccine?" NBER Working Paper #9833, July 2003.
2.3 Health externalities and randomized experiments [4/6] PS 1 DUE • Esther Duflo and Michael Kremer. “Use of Randomization in the Evaluation of Development Effectiveness.” Mimeo, MIT o *Miguel, Edward, and Michael Kremer. “Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities.’’ Econometrica 72, no. 1 (2004): 159–218. 2.4 HIV & the economics of risky behaviors [4/9] • Canning, David. “The Economics of HIV/AIDS in Low-Income Countries: the Case for Prevention.” Journal of Economic Perspectives, Vol 20:3 (Summer 2006): 121-142. o *Kremer, Michael (1996) “Integrating behavioral choice into epidemiological models of the AIDS epidemic”‚ Quarterly Journal of Economics, May: 549-573 o *Pascaline Dupas, “Do Teenagers Respond to HIV Risk Information? Evidence from a Field Experiment in Kenya,” UCLA Manuscript, February 2010. 3. Education and Human Capital 3.1 Education [4/11] (Difference in differences) • UP Ch 18, "The Primacy of Education," • Glewwe and Kremer, “Schools, Teachers, and Education Outcomes in Developing Countries,” in Handbook on the Economics of Education, Elsevier, 2006. o *Duflo, Esther (2001), “Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment,” American Economic Review, Vol. 91 (4), pp 795-813. 3.2 Educational Interventions [4/13] PS 2 DUE • Kremer, Michael, “Randomized Evaluations of Educational Programs in Developing Countries: Some Lessons,” American Economic Review, May 2004. o *Muralidharan, Karthik and Venkatesh Sundaraman. Contract Teachers: Experimental Evidence from India. Mimeo, UCSD. 3.3 Fertility [4/16] • DE Ch 9 • UP Ch 9, "Fertility and Income" o *UP Ch 10, "Fertility in Developing Countries" in UP o *Gary Becker and Gregg Lewis, "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy 81(2), March-April 1973, S279S288. o * Michael Kremer, "Population Growth and Technological Change: 1,000,000 B.C. to 1990," Quarterly Journal of Economics, August, 1993, pp. 681-716. 3.4 Child Labor [4/18] • Edmonds, Eric and Nina Pavcnik (2005), "Child Labor in the Global Economy," Journal of Economic Perspectives, Winter 2005. • UP Ch 17, "Policy Dilemmas for Controlling Child Labor"
4. Land and property rights 4.1 Land [4/20] • DE 11 & 12 • UP Ch 8, "The Role of Agriculture in Development" [4/23] - Midterm 4.2 Land Reform [4/25] • Banerjee, Abhijit (1999), "Land Reform: Prospects and Strategies," MIT Mimeo. 4.3 Property Rights [4/27] • Christopher Woodruff, "Review of de Soto's The Mystery of Capital," Journal of Economic Literature, December 2001, 1215-1223. o *Udry, Christopher and Markus Goldstein. “The Profits of Power: Land Rights and Agricultural Investment in Ghana”. Journal of Political Economy, 2008, vol. 116. o *Field, Erica, “Entitled to Work: Urban Property Rights and Labor Supply in Peru," Mimeo, Harvard, 2006. 5. Labor and migration 5.1 Labor markets [4/30] • DE 13 5.2 Migration [5/2] • DE Ch. 10 • Michael Clemens. “Think Again: Brain Drain”, Foreign Policy, October 22, 2009. 6. Credit 6.1 Credit and investment [5/4] PS 3 DUE • DE Ch 14 • UP Ch 23, "Credit, Intermediation, and Poverty Reduction" o *Dean Karlan and Jonathan Zinman, "Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment," Econometrica, Nov 2009. 6.2 The microcredit promise [5/7] • Beatriz Armendariz and Jonathan Morduch, "Microfinance: Where do we stand?" in Charles Goodhart, editor, Financial Development and Economic Growth: Explaining the Links. Basingstoke, Hampshire, UK: Palgrave Macmillan, 2004. • PE Chapter 9: “Reluctant Entrepreneurs” 7. Savings and Insurance 7.1 Savings and Insurance 1 [5/9] • DE Ch 15 • UP Ch 14, "Transfers and Safety Nets in Poor Countries: Revisiting the Trade-Offs and Policy Options," • MTGI Chapter 7: “To Save: The Unfun Option”
7.2 Insurance Failures [5/11] PS 4 DUE • PE Chapter 6: “Barefoot Hedge-Fund Managers” • UP Ch 22, "Microinsurance: The Next Revolution?" o *Edward Miguel, "Poverty and Witchkilling," Review of Economic Studies. [5/14] = 1st round presentations [5/16] = 2nd round presentations [5/18] NO CLASS 8. Public goods, political economy, aid and corruption 8.1 Public Goods [5/21] • UP Ch 19, "Public Goods and Economic Development," • UP Ch 12, "Ethnic Diversity and Poverty Reduction," o *Abhijit Banerjee and Rohini Somanathan, "The Political Economy of Public goods: Some evidence from India," MIT Manuscript 2006. 8.2 Do leaders matter? [5/23] • Esther Duflo, "Why Political Reservations," Journal of the European Economic Association 3(2-3), May 2005, pp.668-678 o *Rohini Pande, “Can Mandated Political Representation Provide Disadvantaged Minorities Policy Influence? Theory and Evidence from India," American Economic Review, Vol. 93(4), pp.1132-1151, September 2003 o *Ben Jones and Ben Olken, “Do Leaders Matter? National Leadership and Growth since World War II,” Quarterly Journal of Economics 120 (3), pp. 835-864, August 2005. 8.3 Corruption [5/25] PS 5 DUE • UP Ch 11, "Corruption and Development" • Wade, Robert (1982) “The system of administrative and political corruption: Canal irrigation in South India.” Journal of Development Studies, 18(3), 287-328. o *Ben Olken, "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," Journal of Political Economy 115(2), 200-249, April 2007. o *Raymond Fisman and Edward Miguel, "Cultures of Corruption: Evidence from Diplomatic Parking Tickets," BREAD Working Paper #122, May 2006. o *Paul Niehaus and Sandip Sukhtankar, “Corruption Dynamics: The Golden Goose Effect”, BREAD Working Paper #223, May 2009 8.4 Aid [5/30] = Policy Debate • Banerjee, Abhijit: "Making Aid Work," Boston Review, July 2006 o *A fun, well-written book that you should put on your reading list is: Easterly, William (2002), The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, Cambridge, MA: MIT Press.
