Working Papers
Privatization of public goods: Evidence from the sanitation sector in Senegal
With Joshua Deutschmann, Jared Gars, Jean-François Houde, and Laura Schechter.
Privatization of a public good (the management of sewage treatment centers in Dakar, Senegal) leads to an increase in the productivity of downstream sewage dumping companies and a decrease in downstream prices of the services they provide to households. We use the universe of legal dumps of sanitation waste from May 2009 to November 2018 to show that legal dumping increased substantially following privatization–on average an increase of 61.7%, or an increase of about 14,000 cubic meters each month. This is due to increased productivity of all trucks, not just those associated with the company managing the treatment centers. Household-level survey data shows that prices of legal sanitary dumping decreased by ten percent following privatization, and DHS data show that diarrhea rates among children under five decreased in Dakar relative to secondary cities in Dakar following privatization with no similar effect on respiratory illness as a placebo.
Spillovers without Social Interactions in Urban Sanitation
With Joshua Deutschmann, Laura Schechter, and Jessica Zhu.
We run a randomized controlled trial coupled with lab-in-the-field social network experiments in urban Dakar. Decision spillovers and health externalities play a large role in determining uptake of sanitation technology, with decision spillovers being largest among households that don’t receive significant subsidies. There is no evidence that social mechanisms such as social pressure, learning from others, or reciprocity explain the spillovers. We do find evidence of a fourth, non-social, mechanism impacting decisions: increasing returns to scale. As more neighbors adopt the sanitary technology, it becomes more worthwhile for other households to adopt as well.
Agricultural Productivity & Deforestation: Evidence from Brazil
With Juliano Assunção, Ahmed Mushfiq Mobarak, and Dimitri Szerman.
When agricultural productivity improves, farmers may react by expanding farming and further encroach on forest lands, or they may choose to intensify and produce more output with less land. We specify the conditions under which agricultural productivity can have such ambiguous effects on deforestation. We then examine the predictions of that model using county-level data from five waves of the Brazilian Census of Agriculture and satellite-based measures of land use. We identify productivity shocks using exogenous variation in rural electrification in Brazil during 1960-2000. We show that locations suitable for hydropower generation experienced improvements in crop yields, and that credit-constrained farmers subsequently shifted away from land-intensive cattle-grazing and into cropping. As a result, agricultural land use declines, more native vegetation is protected, and these effects persist 25 years later in both census and satellite data. Brazil’s deforestation rate would have been almost twice as large between 1970 and 2000 without that increase in agricultural productivity. That makes the conservation benefits of productivity improvements comparable to the most prominent conservation packages ever implemented in Brazil.
How Important are Non-convexities for Development? Experimental Evidence from Uganda∗
With Joe Kaboski, Virgiliu Midrigan, and Carolyn Pelnik.
Theoretically, indivisible investments together with financial frictions can lower development, generate poverty traps, and lead agents to become risk-loving. Using experimental cash grants involving a choice between a safer, low payoff and a riskier, large payoff lottery, we find that 27 percent choose the riskier, larger lottery. Small grant winners invest in livestock and business inventory, while large grant winners invest in land, which exhibits high capital gains. Our quantitative model shows that the aggregate effects of financial deepening are sizable if the indivisible investment can be accumulated (e.g., capital) but not if it is in fixed supply (e.g., land).