No Kin in the Game: Moral Hazard and War in the U.S. Congress [Feb 2020] — with Nathanial Hilger and Nicholas Miller. NBER Working Paper w23904. [Media: The Intercept; VoxEU (coming soon); The Hindu; FER podcast]
Why do wars occur? We exploit a natural experiment to test the longstanding hypothesis that leaders declare war because they fail to internalize the associated costs. We test this moral hazard theory of conflict by compiling data on 9,210 children of 3,693 U.S. legislators who served in Congress during the four conscription-era wars of the 20th century: World War I, World War II, the Korean War, and the Vietnam War. We test for agency problems by comparing the voting behavior of legislators with draft-age sons versus draft-age daughters. We estimate that (i) having a draft-age son reduces legislator support for pro-conscription bills by 10-17%; (ii) support for conscription increases by a quarter as a legislator’s son crosses the upper age threshold; and (iii) legislators with draft-age sons are more likely to win reelection when the draft is less popular. These results are consistent with a political agency model in which voters update their beliefs about politicians’ motives when they make unpopular legislative decisions. Our findings provide new evidence that agency problems contribute to political violence, and that elected officials can be influenced by changing private incentives.
Peer-Reviewed Publications / Papers Accepted for Publication
We study the impact of plausibly exogenous global food price shocks on local violence across the African continent. In food-producing areas, higher food prices reduce conflict over the control of territory (what we call “factor conflict”) and increase conflict over the appropriation of surplus (“output conflict”). We argue that this difference arises because higher prices raise the opportunity cost of soldiering for producers, while simultaneously inducing net consumers to appropriate increasingly valuable surplus as their real wages fall. In regions without crop agriculture, higher food prices increase both factor conflict and output conflict. We validate local-level findings on output conflict using geocoded survey data on interpersonal theft and violence against commercial farmers and traders. Ignoring the distinction between producer and consumer effects leads to attenuated estimates. Our findings help reconcile a growing but ambiguous literature on the economic roots of conflict.
Foreign Aid Preferences and Perceptions in Donor Countries — with Pedro Vicente and Daniel Kaufmann. Journal of Comparative Economics (2019), 47(3), pp. 601-617. [ungated link]
We present original survey data on preferences for foreign aid in 24 donor countries from 2005 to 2008. On publicly-funded foreign aid (Official Development Assistance, or ODA), we find patterns that are consistent with a standard model of democratic policy formation, in which donations are treated as a pure public good. Controlling for perceptions of current ODA, we show that individual preferences for ODA are (i) negatively correlated with relative income within a country-year; and (ii) positively correlated with inequality at the country level. We extend the analysis to explain variation in the gap between desired aid and actual ODA, arguing that lobbying by high-income special interest groups can divert resources away from the median voter’s preferred level of aid. Consistent with this, we observe that ODA is significantly lower where policymakers are more susceptible to lobbying. Finally, we present a novel test of competing “crowding out” hypotheses. Self-reported private aid donations are negatively correlated with actual ODA, and positively correlated with perceived ODA. This finding is consistent with an emerging argument in the literature, whereby ODA crowds out private aid by enabling charities to forego fundraising activities and crowds in private aid through a signaling channel.
Democratic Accountability, Regulation, and Inward Investment Policy — with Fergal McCann and Michael Dorsch. Economics & Politics (2014), 26(2), pp. 263–284.
We examine the effect of domestic political accountability on leaders’ strategies for attracting Foreign Direct Investment to less developed countries. We consider two policy areas: the tax burden imposed on firms and the regulatory environment in which they operate. We find that democratic governments are more likely to offer relatively lower tax rates to foreign investors, while autocratic governments are more likely to offer relatively lax regulation. This result is driven by the greater elasticity of the political survival function to environmental and labor regulations in more democratic countries. Analyses of firm-level survey data confirm our main theoretical conclusions.
The Illusory Leader: Natural Resources, Taxation and Accountability. Public Choice (2013), 154(3-4), pp. 285-313
This paper proposes and tests a mechanism through which natural resources can affect democracy. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is corroborated using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents. Results are robust to a range of alternative specifications. A supplementary analysis reveals that, consistent with the two-period model proposed, the effects are more acute closer to national elections.
Policy Papers and Other Writing
Book Review: “The Development Dilemma: Security, Prosperity, and a Return to History” by Robert Bates. Economic History Association (eh.net), 2018.
The Political Economy of Direct Cash Transfers in Resource-Rich Countries: A Theoretical Consideration — with Anand Rajaram & Marcelo Giugale. World Bank Policy Research Working Paper Series WPS7575, 2016.
DFID Support to Education in East Africa: Lessons from the Research Literature. CEGA, UC Berkeley. Prepared for the Independent Commission for Aid Impact (UK), 2012