When states in the US banned cousin marriage, it led to more people immigrating to the cities and changing into higher paying professions. More evidence for how kinship networks hold back development. 1/
It used to be that 7% of marriages were between first cousins in the late 1700s -- this was down to 1.5% in the early 1900s.
People who married their cousins tended to be poorer, more rural, and geographically immobile. The census does not report income, but, we can infer something from the occupation.
If you plot out where cousin marriages occur, it's rural states and the Mormons (who didn't exactly move out there with much variety).
So how do we know if people are cousins? We don't see it directly, but we can infer it from the surnames. If lots of people are marrying with the same name, something's up.
To make a causal argument, we need changes in the legality of cousin marriage. First, bans led to a decrease in cousin marriage in the states
We can't compare outcomes of people in different states. If we expect for there to be convergence to the mean of both development and cousin marriage, this will get confounded. Instead, they compare *surnames*, contrasted by their frequency of cousin marriage.
The surnames with a high frequency of cousin marriage, interacted with the state ban, show that they are more likely to migrate to the cities now --
-- and that their income, proxied by occupational score, rises.
Why? Likely because it breaks down kinship networks. People become more dispersed in space, and family sizes become smaller, driven both by fewer children but also by being less likely to live with other couples.
They're also more likely to be institutionalized, suggesting a weaker link to kin.
Ghosh, Hwang, Squires, "Economic Consequences of Kinship: Evidence from U.S. Bans on Cousin Marriage" (2023) academic.oup.com/qje/article/13…
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A company gave its employees a large menu of options. What did they do? They spent 24% more than they had, with a majority of employees picking a plan for which a strictly better version existed. There is no explanation besides people making mistakes. 1/
They are working with a large, anonymous US firm that gave its employees the option to "build your own plan". Everything about their features was identical, except for varying deductibles, copays (a flat fee), coinsurance (a percentage fee), and an out of pocket maximum.
For reasons known only to them, essentially all of the low deductible plans were strictly worse than a high deductible counterpart.
Workers in India are remarkably unwilling to do tasks which do not fit their caste identity. In this field experiments, workers turned down offers of 10 times their daily wage for doing just 10 minutes of work. 1/
The experiment makes hiring offers to 630 men to work assembling paper bags, and one other task, making multiple offers to as to elicit people's willingness to work on those jobs.
They had surveyed villages before so as to establish which castes did which jobs, allowing them to offer people off caste jobs which are conceptually similar to the ones they would traditionally work.
Suppose that the government of a developing country only cares about the welfare of workers. Under plausible assumptions, the best thing you could do for them is tax the workers to give to capitalists. Yes, really! This is why unionization in poor countries is short-sighted. 1/
We should be clear about what assumptions make this result. If you don't like it, challenge the assumptions, and show how it changes the results. (This is general advice). The main friction is that firms have a borrowing constraint, and can only be levered so much.
The other is that entrepreneurs discover investment opportunities of varying sizes. These assumptions seem reasonable. The distribution the investments are drawn from is chosen for convenience, but does not disturb any of the results.
Caste is old -- really old. It was emphatically not the creation of the English colonists, but something that emerged thousands of years ago. The high castes, who oppressed and exploited the low castes, are not originally from India -- they came down from the steppes.
When we look at the genetic origins of the caste, in the North they overwhelmingly from the Caspian Steppes. The Dalits, the untouchable mass of serfs, are what remain of the indigenous people of Northern India.
How do we infer the time apart? Basically, if two groups mated we would expect their genes to be similar to each other. As time goes on and they do not mate, we would expect them to drift apart at a given rate. But this happens in a very particular way:
This paper is so unbelievably good. Absolutely blown away. Why is it the case in Kenya that the cost of food is so high, but the prices received by farmers so low? It's the intermediaries -- they all know each other, and they're colluding. 1/
The normal trouble for studies of "conduct", or the manner in which firms are competing with each other, is that you need exceptional data in order to tell things apart. What could be collusion might actually just be high marginal costs, or a particular demand curve.
You need more and more exogenous shifters of the data, shifters which you need not possess especially when you are working only with observational data, in order to identify first the demand curve, then markups. (You need to shift, and rotate, demand).
A surprise to me -- in coal mines of the early 1900s in Pennsylvania, gun powder for blasting was not bought by the mining firm, but was purchased and brought by the workers. Why? It's likely an attempt to resolve a principal-agent problem.
The coal miner of the day was rather independent. They were paid by piece rate, by weight, in their own little room. Now consider, what happens if the coal mine gives them powder for free? Well, they're gonna be incentivized to use all of it.
Turns out, this isn't great. If you use too much powder, you blow more coal free, but it's too pulverized to be of much use. Making them buy their own powder is a partial restraint, when monitoring quality is difficult.