Development Economics: Experimental approaches
Spring 2013
I. COURSE INFORMATION
Instructors: Dr. Niels Kemper*, Andreas Landmann**
* Phone: 181-1805, Email: niels.kemper@uni-mannheim.de, Office: Room 101, L7, 3-5.
** Phone: 181-1842, Email: andreas.landmann@uni-mannheim.de,
Office: Room 103, L7, 3-5
Time and Location:
The lecture will be split into 5 blocs à 4 sessions (lectures and practical exercises) respectively
taking place in calendar weeks 7, 9, 12, 16 and 20 (most likely on Fridays). The introductory
lecture will take place on February 11th, 3:15 PM. A Q&A session will take place before the
exam.
Office hours: By appointment (please contact us by email).
Hours per week: Lecture (2) plus practical exercise (1).
Course Level: Master.
Prerequisites: Econometrics I.
ECTS-Credits: 7.
Grading: There will be problem sets and a written exam. They will count towards the final
grade as follows:
Grading
Written exam
Problem sets
70 percent
30 percent
Description of lecture: Development economics deals with economic aspects of the
development process in low-income countries. After an examination of the long-run factors of
economic development, this lecture focuses on interventions intended to promote economic
growth and welfare of the population in developing countries, for example, through
interventions in microfinance (credit, savings and insurance), health and education.
In particular, it accumulates evidence to answer the following questions: Do these
interventions really improve the living conditions of the poor? Which interventions do work?
And which do not?
Methodologically, this lecture comprises of econometric methods used for program
evaluation. These methods identify causal relationships between interventions and their
intended outcomes (e.g. using randomized control trials, instrumental variables, regression
discontinuity). The practical exercises include hands-on empirical work with STATA. In
terms of learning outcomes for students, the lecture pursues the following goals:
•
•
•
Introduce students to state-of-the-art research in Development Economics.
Enable students to do own empirical research work employing the econometric
methods dealt with in this course.
Enable students to make critical assessments of research work.
Please find the detailed syllabus at http://froelich.vwl.uni-mannheim.de/1339.0.html.
Readings are listed below. Particularly relevant readings are marked with a “*”.
General readings: The following textbooks and book chapters will be covered in parts.
Angrist, J. and J.-S. Pischke (2009) Mostly Harmless Econometrics: An Empiricist's
Companion, Princeton and Oxford: Princeton University Press. [AP]
Armendariz, B. and J. Morduch (2007) The Economics of Microfinance, Cambridge (MA)
and London: MIT Press. [AM]
Deaton, A. (1997) The Analysis of Household Surveys: A Microeconometric Approach to
Development Policy, Baltimore: John Hopkins University Press. [D]
Duflo, E., Glennerster, R. and M. Kremer (2008) "Using Randomization in Development
Economics Research: A Toolkit," in P. Schultz and J. Strauss (Eds.) Handbook of
Development Economics, Vol. 4, Amsterdam: North-Holland. [DGK]
II. COURSE SCHEDULE
Please note that the reading list is subject to change. We will announce mandatory readings
prior to each class. Access to published research papers is provided through the University of
Mannheim library system. Working papers can be found at http://ideas.repec.org/.
1. Introduction and course overview (calendar week 7: 1 lecture, Niels
Kemper)
2. Bloc 1: Review of methodologies and long-run causes of economic
development (calendar week 7: 4 lectures, Niels Kemper)
2.1 Review of Methodologies
Although these lectures briefly review methodologies for the estimation of causal effects, we
generally presume that students are familiar with the textbook by Angrist and Pischke (2009).
The methodologies of interest are the following: RCTs, Instrumental Variables, Fixed effects,
Differences-in-Differences, Regression Discontinuity, Propensity Score Matching.
Readings:
* AP, Chapter 3-6.
2.2 Why are some nations rich and other poor? Long-run causes of
economic development.
Readings:
Brückner, M and A. Ciccone (2011) “Rain and the democratic window of opportunity,”
Econometrica, 79(3), 923-47.
Acemoglu, D., Johnson, S. and J. Robinson (2001) "The Colonial Origins of Comparative
Development: An Empirical Investigation," American Economic Review, 91(5), 1369-1401.
* Acemoglu, D., Johnson, S. and J. Robinson (2002) "Reversal Of Fortune: Geography And
Institutions In The Making Of The Modern World Income Distribution," The Quarterly
Journal of Economics, 117(4), 1231-94.
* Nunn, N. (2008) "The Long-Term Effects of Africa's Slave Trades," The Quarterly Journal
of Economics, 123(1), 139-76.
Nunn, N. and L. Wantchekon (2011) "The Slave Trade and the Origins of Mistrust in Africa,"
American Economic Review, 101(7), 3221-52.
3. Bloc 2: Credit Markets in developing countries (calendar week 9: 4
lectures, Niels Kemper)
Introductory readings:
AM, Chapter 1, 2, 4, 5.
Cull, R., Demirguc-Kunt, A. and J. Morduch (2009) "Microfinance Meets the Market,"
Journal of Economic Perspectives, 23(1), 167-92.
Readings:
Banerjee, A., Duflo, E., Glennerster, R. and C. Kinnan (2010) “The Miracle of Microfinance:
Evidence from a Randomized Evaluation,” Working Paper.
Bertrand, M., Karlan, D., Mullainathan, S., Shafir, E. and J. Zinman (2010) "What's
Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment,"
The Quarterly Journal of Economics, 125(1), 263-305.
Burgess, R. and R. Pande (2005) "Do Rural Banks Matter? Evidence from the Indian Social
Banking Experiment," American Economic Review, 95(3), 780-95.
Cole, S. (2009) "Fixing market failures or fixing elections? Agricultural credit in India,"
American Economic Journal: Applied Economics , 1(1), 219-50.
de Mel, S. McKenzie, D. and C. Woodruff (2008) "Returns to Capital in Microenterprises:
Evidence from a Field Experiment," The Quarterly Journal of Economics, 123(4), 1329-72.
* Karlan, D. and J. Zinman (2008) “Credit Elasticities in Less-Developed Economies:
Implications for Microfinance,” American Economic Review, 98(3), 1040-68.
* Karlan, D. and J. Zinman (2009) “Observing Unobservables: Identifying Information
Asymmetries with a Consumer Credit Field Experiment,” Econometrica, 77(6), 1993-2008.
4. Savings in developing countries (calendar week 11: 4 lectures, Niels
Kemper)
Introductory readings:
AM, Chapter 6.
Readings:
Amuedo-Dorantes, C. and S. Pozo (2011) “Remittances and Income Smoothing,” American
Economic Review: Papers & Proceedings, 101(3), 582–87.
* Ashraf, N., Karlan, D. and W. Yin (2010) “Tying Odysseus to the Mast: Evidence from a
Commitment Savings Product in the Philippines,” The Quarterly Journal of Economics,
121(2), 635-672.
Duflo, E., Gale, W., Liebman, J., Orszag, P. and E. Saez (2006) "Saving Incentives for Lowand Middle-Income Families: Evidence from a Field Experiment with H&R Block," The
Quarterly Journal of Economics, 121(4), 1311-46.
* Dupas, P. and J. Robinson "Why Don't the Poor Save More? Evidence from Health Savings
Experiments," American Economic Review, forthcoming.
Karlan, D., McConnell, M., Mullainathan, S. and J. Zinman "Getting to the Top of Mind:
How Reminders Increase Saving, “American Economic Journal: Applied Economics,
forthcoming.
5. Risk and insurance in developing countries (calendar week 16: 4 lectures,
Andreas Landmann)
Attanasio, O. and J.-V. Ríos-Rull (2000) “Consumption Smoothing in Island Economies: Can
Public Insurance Reduce Welfare?” European Economic Review, 44(7), 1225–58.
Charness, G. and M. Rabin (2002) “Understanding Social Preferences with Simple Tests,”
Quarterly Journal of Economics, 117(3), 817–69.
Coate, S. and M. Ravallion (1993) “Reciprocity without Commitment: Characterization and
Performance of Informal Insurance Arrangements,” Journal of Development Economics,
40(1), 1–24.
* Cole, S., Giné, X., Tobacman, J., Topalova, P., Townsend, R. and J. Vickery (2010)
“Barriers to Household Risk Management: Evidence from India,” World Bank Policy
Research Working Paper, 5504.
Fehr, E. and K. Schmidt (1999) “A Theory of Fairness, Competition, and Cooperation,”
Quarterly Journal of Economics, 114(3), 817–68.
Leider, S., Möbius, M., Rosenblat, T. and Q.A. Do (2009) “Directed Altruism and Enforced
Reciprocity in Social Networks,” Quarterly Journal of Economics, 124(4): 1815–51.
* Ligon, E. and L. Schechter (2012) “Motives for Sharing in Social Networks,” Journal of
Development Economics, 99(1), 13–26.
Morduch, J. (1995) “Income Smoothing and Consumption Smoothing,” The Journal of
Economic Perspectives, 9(3), 103–14.
Townsend, R. (1994) “Risk and Insurance in Village India,” Econometrica, 62(3), 539–91.
6. Bloc 5: Health and education in developing countries (calendar week 20:
4 lectures, Andreas Landmann)
* Duflo, E. (2001) "Schooling and Labor Market Consequences of School Construction in
Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review,
91(4), 795-813.
* Miguel, E. and M. Kremer (2004) "Worms: Identifying Impacts on Education and Health in
the Presence of Treatment Externalities," Econometrica, 72(1), 159-217.
Kremer, M. and E. Miguel (2007) "The Illusion of Sustainability," The Quarterly Journal of
Economics, 122(3), 1007-65
Thornton, R. (2008) "The Demand for, and Impact of, Learning HIV Status," American
Economic Review, 98(5), 1829-63.
7. Q&A session (calendar week 21: 1 lecture, Niels Kemper and Andreas
Landmann)