Benjamin A. Olken

Do Leaders Matter? National Leadership and Growth Since World War Ii

Economic growth within countries varies sharply across decades. This paper examines one explanation for these sustained shifts in growth—changes in the national leader. We use deaths of leaders while in office as a source of exogenous variation in leadership, and ask whether these plausibly exogenous leadership transitions are associated with shifts in country growth rates. We find robust evidence that leaders matter for growth. The results suggest that the effects of individual leaders are strongest in autocratic settings where there are fewer constraints on a leaders power. Leaders also appear to affect policy outcomes, particularly monetary policy. The results suggest that individual leaders can play crucial roles in shaping the growth of nations.

Corruption perceptions vs. corruption reality

This paper examines the accuracy of beliefs about corruption, using data from Indonesian villages. Specifically, I compare villagers%u2019 stated beliefs about the likelihood of corruption in a road-building project in their village with a more objective measure of %u2018missing expenditures%u2019 in the project, which I construct by comparing the projects%u2019 official expenditure reports with an independent estimate of the prices and quantities of inputs used in construction. I find that villagers%u2019 beliefs do contain information about corruption in the road project, and that villagers are sophisticated enough to distinguish between corruption in the road project and other types of corruption in the village. The magnitude of their information, however, is small, in part because officials hide corruption where it is hardest for villagers to detect. This may limit the effectiveness of grass-roots monitoring of local officials. I also find evidence of systematic biases in corruption beliefs, particularly when examining the relationship between corruption and variables correlated with trust. For example, ethnically heterogeneous villages have higher perceived corruption levels but lower actual levels of missing expenditures. The findings illustrate the limitations of relying solely on corruption perceptions, whether in designing anti-corruption policies or in conducting empirical research on corruption.

The Anatomy of Start-Stop Growth

This paper investigates the remarkable extremes of growth experiences within countries and the changes that occur across growth transitions. We find two main results. First, virtually all but the very richest countries experience both growth miracles and failures over substantial periods. Second, growth accelerations and collapses are asymmetric phenomena. Collapses typically feature reduced investment amidst increasing price instability, whereas growth takeoffs are primarily associated with large expansions in international trade. The results show that even very poor countries regularly grow rapidly, but sustaining growth is difficult and may pose a very different set of challenges than starting it.

Self-Targeting: Evidence from a Field Experiment in Indonesia

This paper shows that adding a small application cost to a transfer program can substantially improve targeting through self-selection. Our village-level experiment in Indonesia finds that requiring beneficiaries to apply for benefits results in substantially poorer beneficiaries than automatic enrollment using the same asset test. Marginally increasing application costs on an experimental basis does not further improve targeting. Estimating a model of the application decision implies that the results are largely driven by the nonpoor, who make up the bulk of the population, forecasting that they are unlikely to pass the asset test and therefore not bothering to apply.

Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia

This paper investigates the impact of elite capture on the allocation of targeted government welfare programs in Indonesia, using both a high-stakes field experiment that varied the extent of elite influence and non-experimental data on a variety of existing government transfer programs. Conditional on their consumption level, there is little evidence that village elites and their relatives are more likely to receive aid programs than non-elites. Looking more closely, however, we find that this overall result masks a difference between different types of elites: those holding formal leadership positions are more likely to receive benefits, while informal leaders are actually less likely to. We show that capture by formal elites occurs during the distribution of benefits under the programs, and not during the processes when the beneficiary lists are determined by the central government. However, while elite capture exists, the welfare losses it creates appear quite small: since formal elites and their relatives are only 9 percent richer than non-elites, are at most about 8 percentage points more likely to receive benefits than non-elites, and represent at most 15 percent of the population, eliminating elite capture entirely would improve the welfare gains from these programs by less than one percent.

Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs Worldwide

Targeted transfer programs for poor citizens have become increasingly common in the developing world. Yet, a common concern among policy makers - both in developing as well as developed countries - is that such programs tend to discourage work. We re-analyze the data from 7 randomized controlled trials of government-run cash transfer programs in six developing countries throughout the world, and find no systematic evidence that cash transfer programs discourage work.

A Biological Model of Unions

This paper applies principles from evolutionary biology to the study of unions. We show that unions which maximize the present discounted wages of current members will be displaced in evolutionary competition by unions with more moderate wage policies that allow their firms to live longer. This suggests that unions with constitutional incumbency advantages that allow leaders to moderate members wage demands may have a selective advantage. The model also suggests that industries with high turnover of firms will have low unionization rates, and that there may be one equilibrium with high unionization and long-lived firms and another with low unionization and short-lived firms. These predictions seem broadly consistent with the data.

Citywide effects of high-occupancy vehicle restrictions: Evidence from “three-in-one” in Jakarta

How to make traffic worse everywhere One policy aimed at improving traffic flows in large cities requires vehicles to carry two or three passengers, usually in lanes or roads set aside for high-occupancy vehicle (HOV) travel. Whether this actually increases speeds depends on how heavily the HOV roads are used and the availability of alternate routes. Hanna et al. took advantage of an abrupt policy change—the elimination of HOV rules—in Jakarta to collect the travel times from Google Maps for HOV and alternate routes before and after the change (see the Perspective by Anderson). They observed a serious worsening of traffic throughout the city. Science, this issue p. 89; see also p. 36 Upon removing vehicle occupancy requirements, more drivers and fewer passengers substantially reduced vehicle speeds in Jakarta, Indonesia. Widespread use of single-occupancy cars often leads to traffic congestion. Using anonymized traffic speed data from Android phones collected through Google Maps, we investigated whether high-occupancy vehicle (HOV) policies can combat congestion. We studied Jakarta’s “three-in-one” policy, which required all private cars on two major roads to carry at least three passengers during peak hours. After the policy was abruptly abandoned in April 2016, delays rose from 2.1 to 3.1 minutes per kilometer (min/km) in the morning peak and from 2.8 to 5.3 min/km in the evening peak. The lifting of the policy led to worse traffic throughout the city, even on roads that had never been restricted or at times when restrictions had never been in place. In short, we find that HOV policies can greatly improve traffic conditions.

Tangible Information and Citizen Empowerment: Identification Cards and Food Subsidy Programs in Indonesia

Redistribution programs in developing countries often “leak” because local officials do not implement programs as the central government intends. We study one approach to reducing leakage. In an experiment in over 550 villages, we test whether mailing cards with program information to targeted beneficiaries increases the subsidy they receive from a subsidized rice program. On net, beneficiaries received 26 percent more subsidy in card villages. Ineligible households received no less, so this represents substantially lower leakage.

Hassles versus prices

How can subsidized health products best target those who value them? Suppose that a government or NGO has a valuable health product, such as bed nets to prevent infection by malarial mosquitoes or hand soap to prevent the spread of disease. It wants to distribute this product to those who need it, but not everyone needs or will use the product. Thus, if the organization gives the product away for free, a substantial amount may be wasted. On page 889 of this issue, Dupas et al. show that introducing small hassles, such as visiting a store each month to redeem a voucher, can be a much more effective way of reducing wastage than charging for the product (1).