Great Fires: Disasters, Spillovers, and Urban Growth in 19th Century America
with Richard Hornbeck
Revise and Resubmit, American Economic Review
December, 2014 draft
Historical city growth, in the United States and worldwide, has required remarkable transformation of outdated durable buildings. Individual reconstruction decisions may be inefficient and restrict growth, however, due to externalities and transaction costs. This paper analyzes new plot-level data in the aftermath of the Great Boston Fire of 1872, estimating substantial economic gains from the created opportunity for widespread reconstruction. An important mechanism appears to be positive externalities from neighbors' reconstruction. Strikingly, impacts from this opportunity for widespread reconstruction were sufficiently large that increases in land values were comparable to the previous value of all buildings burned.
Bargaining and Welfare: A Dynamic Structural Analysis of the Autorickshaw Market
January 2011 Draft
Bargaining for retail goods is ubiquitous in developing countries, where traders spend substantial amounts of time haggling over purchases. Would welfare be higher if trade was conducted at fixed prices instead? The answer is theoretically ambiguous: if bargaining is a low cost form of price discrimination, it may lead to greater trade and welfare and even approximate the optimal incentive compatible outcome. However, if bargaining imposes large utility costs on the participants, then a fixed price may be preferable. I develop the tools to resolve this question, specifying a model of repeated trade with hidden valuations adapted to the context of bargaining, and developing a dynamic structural estimation technique to infer the underlying parameters of the market. I then apply these techniques to bargaining data I collected from the market for local autorickshaw transportation in Jaipur, India.
Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America
with Hunt Allcott
March, 2015 draft
Do natural resources benefit producer economies, or is there a ”Natural Resource Curse,” perhaps as Dutch Disease crowds out manufacturing? We combine new data on oil and gas abundance with Census of Manufactures microdata to estimate how oil and gas booms have affected local economies in the United States since the 1970s. Migration does not fully offset labor demand growth, so local wages rise. Notwithstanding, manufacturing is actually pro-cyclical with resource booms, driven by growth in upstream and locally-traded sectors. The results highlight how many manufacturers produce locally-traded goods and how natural resource linkages can drive manufacturing growth.
Improving Police Performance in Rajasthan, India: Experimental Evidence on Incentives, Managerial Autonomy and Training
with Abhijit Banerjee and Esther Duflo
October, 2014 draft
The role of good management practices in organizations has recently been emphasized. Do the same principles also apply in government organizations, even the most bureaucratic and hierarchical of them? And can skilled, motivated managers identify how to improve these practices, or is there a role for outsiders to help them in this task? Two unique large-scale randomized trials conducted in collaboration with the state police of Rajasthan, India sought to increase police efficiency and improve interactions with the public. In a sample of 162 police stations serving almost 8 million people, the first experiment tested four interventions recommended by police reform panels: limitations of arbitrary transfers, rotation of duty assignments and days off, increased community involvement, and on-duty training. Field experience motivated a novel fifth intervention: “decoy” visits by field officers posing as citizens attempting to register cases, which gave constables incentives to behave more professionally. Only two of these, training and decoy visits, had robust impacts. The other three, which could have reduced middle managers' autonomy, were poorly implemented and ineffective. Building upon these findings, we designed a second experiment that provided explicit incentives to police officers to carry out sobriety traffic checkpoints and did not rely on middle managers. Linking good performance with the promise of a transfer from the reserve barracks to a desirable police station posting, these incentives worked within existing organizational constraints and had very large effects on performance.
The Efficient Deployment of Police Resources: Theory and New Evidence from a Randomized Drunk Driving Crackdown in India
with Abhijit Banerjee, Esther Duflo, and Nina Singh
July, 2014 draft
A central question in the law and economics literature is whether, with limited resources, police should be deployed randomly over many locations or establish a predictable presence in crime “hot spots”. Critics of static hot spot enforcement have argued that this approach will only lead to crime shifting to other locations. But for short “crackdowns”, this may not apply, as it make take some time for potential law breakers to understand that the police has started a campaign, and the police may take advantage of this period to intervene intensively in the most productive location. We propose a model where criminal progressively learn about policing, and test it using a randomized controlled experiment on an anti-drunk driving campaign that we set up in collaboration with the police department in Rajasthan, where we randomized both whether the crackdown was random across 3 main routes or fixed in the best route, and the intensity of the crackdown. We find clear evidence of people learning over time that a crackdown is occuring, and strategically responding to it. Indeed, learning is quick enough that even for a short campaign the surprise checkspoints still dominate the fixed location approach. We estimate that crackdowns in surprised locations reduced night accidents in the area covered by a particular police station by 17%, and night deaths by 25% over a two month crackdown and 6 weeks following it.
Experimental vs. Structural Estimates of the Return to Capital in Microenterprises
April 2011 Draft
This paper carries out the first comparison of production function parameters estimated by structural techniques with those estimated via randomized instrumental variables using a unique dataset and field experiment performed by . In the context of a simple model of a household firm, I discuss the coefficients that each approach estimates, and the assumptions necessary to interpret those coefficients as the structural parameters of the model. I find that the values of structural and experimental estimators that most plausibly estimate the same parameters are indeed statistically and economically similar, suggesting that in some contexts structural models of production functions may be effective in recovering the parameters of production functions in the context of developing markets. These parameters may then be used to address questions relating to firm productivity and capital allocation that are both central to the study of firms in development, and potentially difficult to identify using randomized variation alone.