Gani Aldashev

Religion, culture, and development

Abstract This chapter tries to synthesize the progress that economists have made towards understanding various aspects of the role of religion in human societies from a development economics perspective. We start by reviewing the contributions that consider religious beliefs as exogenously given and try to understand their effects on individual economic behavior, both directly and through the effect of religion on institutions. Next, we summarize the literature that considers adherence to and interpretation of religious dogmas by individuals as a strategic choice (i.e. using religious beliefs as instruments/means towards individuals’ (economic) ends). We proceed to review contributions that endogenize the content and the quantity of religious denominations, using the industrial organization approach. The final part considers the role of the state, which intentionally chooses to influence the contents of religion and the intensity of its dogmas. More precisely, we consider situations in which rulers may adopt a particular religion for the purpose of nation-building and external positioning or may instrumentalize the religion with a view to weakening internal political opposition and consolidating an authoritarian regime. We suggest that, in order to fully comprehend the role of religion, a political economy approach is required and it is necessary to consider the possibility that religion can be manipulated by political authorities for various reasons that depend upon the historical context.

Formal Law as a Magnet to Reform Custom

The question of the role of statutory law in social environments permeated by custom and traditional norms is particularly important when the statutory law aims to correct social inequalities embedded in the customs. The conventional view is that formal law often fails to take root in custom-driven societies, especially when the formal law conflicts with custom. We present a simple analytical model with elite members and commoners as contendants in front of a customary judge. If unhappy with the customary judge’s verdict, a contendant can make recourse to a formal court, but at a cost of social exclusion. We find that from the low activity of formal courts one cannot infer that the statutory law is irrelevant. We describe an indirect (“magnet”) effect of formal law: by serving as an alternative forum for commoners, the formal system induces the customary judge (who tries to keep commoners within his jurisdiction) to adjust his verdicts toward the interests of commoners. We illustrate this mechanism through an in-depth case study of the so-called PNDC Law 111 on Intestate Succession in Ghana. Radicalism in legal reform may defeat its own purpose: under certain conditions, a gradual reform better serves the interests of the disadvantaged.

Political Information Acquisition for Social Exchange

Why do citizens get politically informed in a democracy? On one hand, being informed allows a citizen to participate in political discussions within her social network. On the other hand, having an informed opinion can help her to extend her social network. This paper builds a simple model on these insights and finds that effort in political information acquisition has inverted-U shape in the size of social network. The data from the 2000 American National Election Study and the 2002–2006 European Social Surveys confirm this theory: political information acquisition, political knowledge, and interest in politics increase with the size of social network, at a decreasing rate. The effect of social network is much weaker for the political efficacy measures for the United States, but not for Europe.

Legal reform in the presence of a living custom: An economic approach

Empowerment of disadvantaged groups of population is a key issue in development. One major difficulty in implementing progressive legal reforms arises from the persistent and contrary influence of custom. In this paper, we present a simple theoretical framework that analyzes how customary rules evolve under the impact of a change in formal law. This evolution is ultimately caused by a modification of relative costs and benefits of exiting the community by members of the disadvantaged groups as a result of change in the law. We also describe how the welfare of these groups is affected and provide illustrative evidence.

Assignment Procedure Biases in Randomised Policy Experiments

Randomized controlled trials (RCT) have become a dominant empirical tool in applied economics. The internal validity of RCTs crucially depends on the (implicit) assumption that the procedure assigning subjects to treatment and control groups has no effect on behavior. We show theoretically that this assumption is violated when people are motivated by belief-dependent preferences and care about the intentions of others. The choice of assignment procedure influences subjects’ behavior and, consequently, the RCTs’ findings. Strikingly, even a credible and explicit randomization procedure does not guarantee an unbiased prediction of the impact of a general introduction of the policy.

Follies subdued: Informational efficiency under adaptive expectations and confirmatory bias

We study the informational efficiency of a market with a single traded asset. The price initially differs from the fundamental value, about which the agents have noisy private information (which is, on average, correct). A fraction of traders revise their price expectations in each period. The price at which the asset is traded is public information. The agents’ expectations have an adaptive component and a social-interactions component with confirmatory bias. We show that, taken separately, each of the deviations from rationality worsen the information efficiency of the market. However, when the two biases are combined, the degree of informational inefficiency of the market (measured as the deviation of the long-run market price from the fundamental value of the asset) can be non-monotonic both in the weight of the adaptive component and in the degree of the confirmatory bias. For some ranges of parameters, two biases tend to mitigate each other’s effect, thus increasing the informational efficiency.

Clans and Ploughs: Traditional Institutions and Production Decisions of Kazakhs under Russian Colonial Settlement

This article investigates how, with increasing land pressure during Russian settlement in Kazakh steppes in the late nineteenth century, clan institutions affected the transition from nomadic pastoralism to settled agriculture. Using a novel dataset constructed from Russian colonial expedition materials matched with clan genealogies, we find that, controlling for geographic factors, clan identity strongly influenced the duration of transhumance period, the organization of production, and the acquisition of new agricultural tools. Information transmission within clans, external economies of scale in nomadic pastoralism, and clan-specific values and norms underlie the results.

Development NGOs: Basic Facts

This paper systematizes the results of the empirical literature on development non-governmental organizations (NGOs), drawing both from quantitative and qualitative analyses, and constructs a set of basic facts about these organizations. These basic facts concern the size of the development NGO sector and its evolution, the funding of NGOs, the allocation of NGO aid and projects across beneficiary countries, the relationship of NGOs with beneficiaries, and the phenomenon of globalization of development NGOs.

Small is Beautiful: Motivational Allocation in the Non-Profit Sector

We build an occupational-choice general-equilibrium model with for-pro t rms, non-pro torganizations and endogenous private warm-glow donations. Lack of monitoring on the use offunds implies that an increase of funds of the non-pro t sector (because of a higher incomein the for-pro t sector, a stronger preference for giving, or an inflow of foreign aid) worsensthe motivational composition and performance of the non-pro t sector. We also analyze theconditions under which donors (through linking donations to the motivational composition of thenon-pro t sector), non-pro ts themselves (through peer monitoring), or the government (usinga tax- nanced public funding of non-pro ts) can eliminate the low-e¤ectiveness equilibrium. Wepresent supporting case-study evidence from humanitarian emergencies and developing-countryNGOs.