Thursday, February 3, 2011

How history shapes societies?

Two excellent posts. First, Tim Harford draws attention to the debate on the relevance of history on present day political and socio-economic outcomes in many countries across the world. Second, Chris Dillow writes how "history informs the present" and societies are "the creations of history".

Harford points to the works of Melissa Dell and Daniel Berger who examined the mita system of forced labour (introduced by Spanish conquerors, who forced one-seventh of adult population of villages surrounding mines in Bolivia to work there) and the differences in taxation across 7° 10’ line of latitude in Nigeria and traced back current outcomes to those historical practices.

Though the mita system was abolished in 1812, the former mita districts are 25% poorer than apparently identical districts on the other side of a boundary. Dell traces this to the fact that "areas outside the mita system were more likely to have large farms; the owners of such haciendas were politically influential and were able to campaign for public goods such as better roads".

Similarly, Berger argues that while to the south, officials relied on customs duties and other taxes on trade through Nigeria’s ports, in the north taxes were levied on people. Though the different systems were abolished 96 years back, the fact that somebody had to arrange a census and keep proper accounts in the North contributed to a difference in bureaucratic competence which has persisted for a century and continues to exert its favorable influence on the polity of that area. Tim Harford writes,

"Economists became interested in the idea that history means something when three influential research papers were published, the first in 1997. Rafael La Porta and colleagues argued that British common law provided better protection for investors than the Roman civil law tradition, and showed that former British colonies seemed to have more advanced financial markets than former French colonies. Stanley Engerman and Kenneth Sokoloff argued that Latin America had underperformed relative to Canada and the US, because it had a climate better suited to growing plantation crops such as sugar, which in turn led to exploitative institutions.

And Daron Acemoglu, Simon Johnson and James Robinson showed that the reason tropical diseases are strongly correlated with underdevelopment is less for the obvious reason – that malaria is bad for the economy – and more because such diseases killed large numbers of settlers, who lacked any resistance to them. This encouraged colonial powers to grab gold, ivory and slaves rather than settling the countries and establishing decent institutions."

Recently, Alberto Alesina, Paola Giuliano, and Nathan Nunn showed how societies which traditionally made intensive use of the plough have lower fertility even today than societies which used other tools such as the hoe. They attribute this to child labour being of less use to plough-based agriculture than it is to hoe-based farming - and this different economic incentive to have children shaped cultural norms which persist long after society has moved away from agriculture.

Graziella Bertocchi and Arcangelo Dimico investigated the impact of slavery on US economic performance today. They find that,

"The legacy of slavery does not affect current income per capita, but does affect current income inequality. In other words, those counties that displayed a higher proportion of slaves are currently not poorer, but more unequal. Moreover, we find that the impact of slavery on current income inequality is determined by racial inequality... even after controlling for potential endogeneity, current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites."

In another working paper, Daron Acemoglu, Tarek A. Hassan, and James A. Robinson show that the holocaust still affects population and voting behaviour now. They documented an association between the severity of the Holocaust by the Nazis during World War II and long-run economic and political outcomes within Russia - "cities that experienced the Holocaust most intensely have grown less, and both cities and administrative districts (oblasts) where the Holocaust had the largest impact have worse economic and political outcomes since the collapse of the Soviet Union".

Nathan Nunn has an excellent summary of the empirical evidence that points toward the important long-term effects that historic events can have on economic development. In another paper Nunn created a path-dependent model that links Africa’s current under-development to colonial rule and the slave trade.

I will quote Dillow to have the final say,

"All of this confirms Edmund Burke’s famous saying that society is 'a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born'. Like all partnerships it binds us and changes us in unexpected ways. What’s more, it is in the very nature of things that we do not fully appreciate this, because... 'culture is what you don’t notice' - but culture is the route through which yesterday affects today."


gaddeswarup said...

The mechanisms of these processes are not clear to me. Nunn sas in section 2.2 of his survey paoer: "Although the analysis of Banerjee & Iyer(2005)and Dell(2008)provide evidence of the long-term impacts of initial colonial institutions, the studies do differ from that by Acemoglu et al. (2001) because the transmission mechanism is not the persistence of these initially implemented institutions. In Dell (2008), the hypothesized mechanism is the concentration of wealth and power and the resulting provision of public goods. Similarly, in the analysis by Banerjee & Iyer the transmission mechanism is not through the persistence of these initially implemented institutions, because the differences in colonial land revenue collection systems no longer exist."
William Easterle has another sort of paper, the gist of it here:

Sai Prasad said...

The impact of the potato famine on the eating behaviour of the Irish might also go to strengthen the same argument.

gulzar said...

thanks gaddeswarup. i completely agree with you.

i was thinking of commenting on the papers. the post got too long with examples that i skipped it. it is indeed very difficult, even with rigorous controls, to exactly outline the mechanisms of such transmission. often times, we tend to make the classic error of confusing corelation for causation.

further, even assuming the absence of direct causative role, what was the impact of the original colonial practice on some more recent trend/practice/institution, which in turn may have contributed to the political/socio-economic outcome being studied.

the challenge with such exercises remains to isolate and reasonably assess the "hysterisis effect" of the colonial practice/trend and its impact on the social outcome.

sai sir, i agree with your example.

gulzar said...

in other words, the issue here is not whether the colonial practice had a role in causing the current social/economic/political outcome.

it is about what extent is the contributory role. is it too small as to make it more a corelation than causation or the other way round.