Economics 172 Issues in African Economic Development Professor Ted Miguel Department of Economics University of California, Berkeley
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Econ
omic
s 17
2Is
sues
in A
frica
n E
cono
mic
Dev
elop
men
t
Pro
fess
or T
ed M
igue
lD
epar
tmen
t of E
cono
mic
sU
nive
rsity
of C
alifo
rnia
, Ber
kele
y
Econ
omic
s 17
2Is
sues
in A
frica
n E
cono
mic
Dev
elop
men
t
Lect
ure
11 �
Febr
uary
20,
200
7
Eco
nom
ics
172:
Lec
ture
11
3
Eco
nom
ics
172:
Lec
ture
11
4
�Pre
�t=
0
�Pos
t�t=
1
Diff
0=
+1%
Diff
1=
-17%
Eco
nom
ics
172:
Lec
ture
11
5
Taki
ng th
e di
ffere
nce-
in-d
iffer
ence
s
�Th
e di
ffere
nce-
in-d
iffer
ence
s (D
D) e
stim
ator
take
s th
e di
ffere
nces
bet
wee
n eq
uatio
ns (2
) and
(3) t
o el
imin
ate
omitt
ed v
aria
ble
bias
and
del
iver
the
true
effe
ct:
Equ
atio
n (2
) �E
quat
ion
(3)
= {E
(Yi1
| Ti1=1
) �E
(Yi1
| Ti1=0
)}�
{E(Y
i0| T
i1=1
) �E
(Yi0
| Ti1=0
)}
Eco
nom
ics
172:
Lec
ture
11
6
Taki
ng th
e di
ffere
nce-
in-d
iffer
ence
s
�Th
e di
ffere
nce-
in-d
iffer
ence
s (D
D) e
stim
ator
take
s th
e di
ffere
nces
bet
wee
n eq
uatio
ns (2
) and
(3) t
o el
imin
ate
omitt
ed v
aria
ble
bias
and
del
iver
the
true
effe
ct:
Equ
atio
n (2
) �E
quat
ion
(3)
= {E
(Yi1
| Ti1=1
) �E
(Yi1
| Ti1=0
)}�
{E(Y
i0| T
i1=1
) �E
(Yi0
| Ti1=0
)}
= D
iff1
�D
iff0
= (-
17%
) �(+
1%) =
-18%
Eco
nom
ics
172:
Lec
ture
11
7
Inte
rpre
ting
Fox
et a
l.�s
(200
4) re
sults
�In
clud
ing
abse
ntee
ism
, fin
al y
ear i
ncom
e dr
ops
35%
Eco
nom
ics
172:
Lec
ture
11
8
Inte
rpre
ting
Fox
et a
l.�s
(200
4) re
sults
�In
clud
ing
abse
ntee
ism
, fin
al y
ear i
ncom
e dr
ops
35%
�S
ome
cont
rols
are
als
o lik
ely
ill w
ith H
IV/A
IDS
, lea
ding
th
e es
timat
ed T
�C d
iffer
ence
to b
e a
low
er b
ound
. The
de
clin
e ov
er ti
me
in C
pro
duct
ivity
may
be
AID
S re
late
d
Eco
nom
ics
172:
Lec
ture
11
9
T i1=
0
T i1=
1
HIV
/AID
SE
ffect
?
Eco
nom
ics
172:
Lec
ture
11
10
Inte
rpre
ting
Fox
et a
l.�s
(200
4) re
sults
�In
clud
ing
abse
ntee
ism
, fin
al y
ear i
ncom
e dr
ops
35%
�S
ome
cont
rols
are
als
o lik
ely
ill w
ith H
IV/A
IDS
, lea
ding
th
e es
timat
ed T
�C d
iffer
ence
to b
e a
low
er b
ound
. The
de
clin
e ov
er ti
me
in C
pro
duct
ivity
may
be
AID
S re
late
d
�S
ick
wor
kers
ofte
n ha
ve fa
mily
mem
ber �
help
ers�
. So
estim
ates
are
aga
in li
kely
to b
e lo
wer
bou
nds
Eco
nom
ics
172:
Lec
ture
11
11
Inte
rpre
ting
Fox
et a
l.�s
(200
4) re
sults
�In
clud
ing
abse
ntee
ism
, fin
al y
ear i
ncom
e dr
ops
35%
�S
ome
cont
rols
are
als
o lik
ely
ill w
ith H
IV/A
IDS
, lea
ding
th
e es
timat
ed T
�C d
iffer
ence
to b
e a
low
er b
ound
. The
de
clin
e ov
er ti
me
in C
pro
duct
ivity
may
be
AID
S re
late
d
�S
ick
wor
kers
ofte
n ha
ve fa
mily
mem
ber �
help
ers�
. So
estim
ates
are
aga
in li
kely
to b
e lo
wer
bou
nds
�Is
the
assu
mpt
ion
of n
o tim
e-va
ryin
g om
itted
var
iabl
es
reas
onab
le?
AID
S v
ictim
s ha
ve h
ighe
r abs
ente
eism
th
ree
year
s pr
ior.
Wha
t is
the
right
�cou
nter
fact
ual�?
Eco
nom
ics
172:
Lec
ture
11
12
Key
que
stio
ns in
the
stud
y of
HIV
/AID
S
(0) M
easu
ring
the
exte
nt o
f the
pro
blem
(tod
ay)
(1) W
hat i
mpa
ct d
oes
HIV
/AID
S h
ave
on e
cono
mic
de
velo
pmen
t in
Afri
ca?
--La
bor p
rodu
ctiv
ity /
labo
r tur
nove
r--
Hum
an c
apita
l acc
umul
atio
n (o
rpha
ns)
--In
vest
men
t and
sav
ings
(as
time
horiz
ons
chan
ge)
Eco
nom
ics
172:
Lec
ture
11
13
Par
ent d
eath
and
sch
ool p
artic
ipat
ion
in K
enya
�E
vans
and
Mig
uel (
2005
) stu
dy th
e im
pact
of p
aren
t de
ath
on s
choo
l par
ticip
atio
n am
ong
prim
ary
scho
ol
child
ren
in K
enya
(usi
ng th
e de
wor
min
gpr
ojec
t dat
aset
)
�P
aren
t dea
th le
ads
to a
dro
p of
at l
east
5-6
per
cent
age
poin
ts in
sch
ool p
artic
ipat
ion
�Im
pact
s ar
e pa
rticu
larly
neg
ativ
e fo
llow
ing
mat
erna
l de
aths
, and
for w
orse
stu
dent
s
Eco
nom
ics
172:
Lec
ture
11
14
How
do
orph
ans,
oth
ers
com
pare
at b
asel
ine?
Bec
ame
Nev
erB
-NO
rpha
nsO
rpha
ns19
97 S
choo
l par
ticip
atio
n0.
830.
810.
02(0
.03)
1998
Sch
ool p
artic
ipat
ion
0.92
0.92
0.00
(0.0
1)W
eigh
t-for
-age
(Z),
1998
-1.4
0-1
.45
0.05
(0.0
3)M
alar
ia in
last
mon
th, 1
998
0.40
0.39
0.01
(0.0
2)H
ouse
hold
has
a la
trine
, 199
80.
810.
82-0
.02
(0.0
2)H
ouse
hold
ow
ns c
attle
, 199
80.
490.
49-0
.00
(0.0
2)
Eco
nom
ics
172:
Lec
ture
11
15
Eco
nom
ics
172:
Lec
ture
11
16
Eco
nom
ics
172:
Lec
ture
11
17
Eco
nom
ics
172:
Lec
ture
11
18
DD
Eco
nom
ics
172:
Lec
ture
11
19
Key
que
stio
ns in
the
stud
y of
HIV
/AID
S
(0) M
easu
ring
the
exte
nt o
f the
pro
blem
(tod
ay)
(1) W
hat i
mpa
ct d
oes
HIV
/AID
S h
ave
on e
cono
mic
de
velo
pmen
t in
Afri
ca?
(2) W
hy d
oes
HIV
/AID
S c
ontin
ue to
spr
ead
in A
frica
?
(3) W
hat c
an /
shou
ld p
ublic
pol
icy
do a
bout
HIV
/AID
S?
Eco
nom
ics
172:
Lec
ture
11
20
Key
que
stio
ns in
the
stud
y of
HIV
/AID
S
(0) M
easu
ring
the
exte
nt o
f the
pro
blem
(tod
ay)
(1) W
hat i
mpa
ct d
oes
HIV
/AID
S h
ave
on e
cono
mic
de
velo
pmen
t in
Afri
ca?
(2) W
hy d
oes
HIV
/AID
S co
ntin
ue to
spr
ead
in A
fric
a?
(3) W
hat c
an /
shou
ld p
ublic
pol
icy
do a
bout
HIV
/AID
S?
Eco
nom
ics
172:
Lec
ture
11
21
Why
doe
s H
IV c
ontin
ue to
spr
ead?
�La
ck o
f inf
orm
atio
n, a
war
enes
s ab
out H
IV/A
IDS
?�
Pro
babl
y no
t a g
ood
expl
anat
ion
anym
ore
�W
hat e
lse?
Eco
nom
ics
172:
Lec
ture
11
22
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
�Ti
min
g: tw
o pe
riods
, You
th (t
=1),
Old
age
(t=2
)�
Key
dec
isio
n in
You
th: E
ngag
e in
uns
afe
sex
or n
ot
Eco
nom
ics
172:
Lec
ture
11
23
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
�Ti
min
g: tw
o pe
riods
, You
th (t
=1),
Old
age
(t=2
)�
Key
dec
isio
n in
You
th: E
ngag
e in
uns
afe
sex
or n
ot
�Li
kelih
ood
of li
ving
to O
ld a
ge:
�P
∈(0
,1)i
f HIV
-�
PH
IV∈
(0,P
)if H
IV+,
so
PH
IV<
P
Eco
nom
ics
172:
Lec
ture
11
24
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
�Ti
min
g: tw
o pe
riods
, You
th (t
=1),
Old
age
(t=2
)�
Key
dec
isio
n in
You
th: E
ngag
e in
uns
afe
sex
or n
ot
�Li
kelih
ood
of li
ving
to O
ld a
ge:
�P
∈(0
,1)i
f HIV
-�
PH
IV∈
(0,P
)if H
IV+,
so
PH
IV<
P
�V
alue
of o
ne p
erio
d of
life
: V >
0�
Val
ue o
f uns
afe
sex:
S >
0
Eco
nom
ics
172:
Lec
ture
11
25
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
�Ti
min
g: tw
o pe
riods
, You
th (t
=1),
Old
age
(t=2
)�
Key
dec
isio
n in
You
th: E
ngag
e in
uns
afe
sex
or n
ot
�Li
kelih
ood
of li
ving
to O
ld a
ge:
�P
∈(0
,1)i
f HIV
-�
PH
IV∈
(0,P
)if H
IV+,
so
PH
IV<
P
�V
alue
of o
ne p
erio
d of
life
: V >
0�
Val
ue o
f uns
afe
sex:
S >
0
�A
ssum
e th
e ag
ent i
s H
IV-i
n he
r/his
you
th
Eco
nom
ics
172:
Lec
ture
11
26
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
Eco
nom
ics
172:
Lec
ture
11
27
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
t=1
t=2
Eco
nom
ics
172:
Lec
ture
11
28
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
�A
ssum
e un
safe
sex
alw
ays
lead
s pe
ople
to b
e H
IV+
EU
(Uns
afe
sex)
= {V
+S} +
{PH
IVV
+ (1
�P
HIV
)*0}
Eco
nom
ics
172:
Lec
ture
11
29
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
�A
ssum
e un
safe
sex
alw
ays
lead
s pe
ople
to b
e H
IV+
EU
(Uns
afe
sex)
= {V
+S} +
{PH
IVV
+ (1
�P
HIV
)*0}
Key
term
: ben
efits
of u
nsaf
e se
x (fi
nanc
ial,
phys
ical
, etc
.)
Eco
nom
ics
172:
Lec
ture
11
30
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
�A
ssum
e un
safe
sex
alw
ays
lead
s pe
ople
to b
e H
IV+
EU
(Uns
afe
sex)
= {V
+S} +
{PH
IVV
+ (1
�P
HIV
)*0}
= V
(1+P
HIV
) + S
Eco
nom
ics
172:
Lec
ture
11
31
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
�A
ssum
e un
safe
sex
alw
ays
lead
s pe
ople
to b
e H
IV+
EU
(Uns
afe
sex)
= {V
+S} +
{PH
IVV
+ (1
�P
HIV
)*0}
= V
(1+P
HIV
) + S
�E
U (U
nsaf
e se
x) �
EU
(Saf
e se
x) =
S +
V(P
HIV
�P
) > 0
Eco
nom
ics
172:
Lec
ture
11
32
Why
doe
s H
IV s
prea
d? A
sim
ple
mod
el
��R
atio
nal�
deci
sion
rule
: eng
age
in u
nsaf
e se
x if
the
�exp
ecte
d ut
ility
�of u
nsaf
e is
gre
ater
than
of s
afe
sex
EU
(Saf
e se
x)
= V
+ {P
V +
(1 �
P)*
0} =
V(1
+P)
�A
ssum
e un
safe
sex
alw
ays
lead
s pe
ople
to b
e H
IV+
EU
(Uns
afe
sex)
= {V
+S} +
{PH
IVV
+ (1
�P
HIV
)*0}
= V
(1+P
HIV
) + S
�E
U (U
nsaf
e se
x) �
EU
(Saf
e se
x) =
S +
V(P
HIV
�P
) > 0
Ben
efits
(+)
Cos
ts (-
)
Eco
nom
ics
172:
Lec
ture
11
33
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�Im
agin
e pe
ople
do
not k
now
thei
r inf
ectio
n st
atus
. S/h
e th
inks
she
has
like
lihoo
d R
∈[0
,1]o
f alre
ady
bein
g H
IV+
EU
(Saf
e se
x)
= V
+ [R
PH
IV+
(1 �
R)P
]V
Eco
nom
ics
172:
Lec
ture
11
34
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�Im
agin
e pe
ople
do
not k
now
thei
r inf
ectio
n st
atus
. S/h
e th
inks
she
has
like
lihoo
d R
∈[0
,1]o
f alre
ady
bein
g H
IV+
EU
(Saf
e se
x)
= V
+ [R
PH
IV+
(1 �
R)P
]V
Eco
nom
ics
172:
Lec
ture
11
35
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�Im
agin
e pe
ople
do
not k
now
thei
r inf
ectio
n st
atus
. S/h
e th
inks
she
has
like
lihoo
d R
∈[0
,1]o
f alre
ady
bein
g H
IV+
EU
(Saf
e se
x)
= V
+ [R
PH
IV+
(1 �
R)P
]V
EU
(Uns
afe
sex)
= V
(1+P
HIV
) + S
(UN
CH
AN
GE
D)
Eco
nom
ics
172:
Lec
ture
11
36
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�Im
agin
e pe
ople
do
not k
now
thei
r inf
ectio
n st
atus
. S/h
e th
inks
she
has
like
lihoo
d R
∈[0
,1]o
f alre
ady
bein
g H
IV+
EU
(Saf
e se
x)
= V
+ [R
PH
IV+
(1 �
R)P
]V
EU
(Uns
afe
sex)
= V
(1+P
HIV
) + S
(UN
CH
AN
GE
D)
�E
U (U
nsaf
e se
x) �
EU
(Saf
e se
x)=
S +
V(P
HIV
�P
)(1
�R
) > 0
Eco
nom
ics
172:
Lec
ture
11
37
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�Im
agin
e pe
ople
do
not k
now
thei
r inf
ectio
n st
atus
. S/h
e th
inks
she
has
like
lihoo
d R
∈[0
,1]o
f alre
ady
bein
g H
IV+
EU
(Saf
e se
x)
= V
+ [R
PH
IV+
(1 �
R)P
]V
EU
(Uns
afe
sex)
= V
(1+P
HIV
) + S
(UN
CH
AN
GE
D)
�E
U (U
nsaf
e se
x) �
EU
(Saf
e se
x)=
S +
V(P
HIV
�P
)(1
�R
) > 0
��N
othi
ng to
lose
�: co
st o
f uns
afe
sex
smal
ler t
han
befo
re
Eco
nom
ics
172:
Lec
ture
11
38
Why
doe
s H
IV s
prea
d? A
n ex
tens
ion
�W
hat a
re im
plic
atio
ns o
f thi
s m
odel
for p
ublic
hea
lth
mes
sage
s th
at s
tress
how
wid
espr
ead
the
HIV
viru
s al
read
y is
?
�W
hat a
re th
e im
plic
atio
ns o
f thi
s m
odel
for e
fforts
to
boos
t AR
V tr
eatm
ent (
e.g.
, Bot
swan
a)?
Eco
nom
ics
172:
Lec
ture
11
39
Wha
t is
this
mod
el m
issi
ng?
(1)
Peo
ple
are
altru
istic
-Allo
w th
e be
nefit
s of
uns
afe
sex
to b
e a
func
tion
of R
: S
= S
(R).
This
may
offs
et th
e �n
othi
ng to
lose
�effe
ct
Eco
nom
ics
172:
Lec
ture
11
40
Wha
t is
this
mod
el m
issi
ng?
(1)
Peo
ple
are
altru
istic
-Allo
w th
e be
nefit
s of
uns
afe
sex
to b
e a
func
tion
of R
: S
= S
(R).
This
may
offs
et th
e �n
othi
ng to
lose
�effe
ct
(2)
Not
all
sexu
al c
hoic
es a
re v
olun
tary
(e.g
., ra
pe)
Eco
nom
ics
172:
Lec
ture
11
41
Wha
t is
this
mod
el m
issi
ng?
(1)
Peo
ple
are
altru
istic
-Allo
w th
e be
nefit
s of
uns
afe
sex
to b
e a
func
tion
of R
: S
= S
(R).
This
may
offs
et th
e �n
othi
ng to
lose
�effe
ct
(2)
Not
all
sexu
al c
hoic
es a
re v
olun
tary
(e.g
., ra
pe)
(3)
Soc
ial /
cul
tura
l nor
ms
rega
rdin
g �a
ccep
tabl
e�se
xual
be
havi
or, e
spec
ially
rega
rdin
g sa
fe s
ex
(4)
Poc
kets
of p
oor i
nfor
mat
ion
abou
t HIV
/AID
S(5
)O
ther
s?
Eco
nom
ics
172:
Lec
ture
11
42
Eco
nom
ics
172:
Lec
ture
11
43
Wha
t can
pub
lic p
olic
y do
abo
ut H
IV/A
IDS
?
(1)
Test
ing
peop
le, i
nfor
m th
em o
f the
ir H
IV s
tatu
s
Eco
nom
ics
172:
Lec
ture
11
44
Wha
t can
pub
lic p
olic
y do
abo
ut H
IV/A
IDS
?
(1)
Test
ing
peop
le, i
nfor
m th
em o
f the
ir H
IV s
tatu
s
(2)
Con
dom
dis
tribu
tion
(3)
Pub
lic h
ealth
info
rmat
ion
cam
paig
ns (e
.g.,
Uga
nda)
(4)
Reg
ulat
e pr
ostit
utio
n
Eco
nom
ics
172:
Lec
ture
11
45
Wha
t can
pub
lic p
olic
y do
abo
ut H
IV/A
IDS
?
(1)
Test
ing
peop
le, i
nfor
m th
em o
f the
ir H
IV s
tatu
s
(2)
Con
dom
dis
tribu
tion
(3)
Pub
lic h
ealth
info
rmat
ion
cam
paig
ns (e
.g.,
Uga
nda)
(4)
Reg
ulat
e pr
ostit
utio
n
(5)
Sub
sidi
ze tr
eatm
ent f
or a
nti-r
etro
vira
l med
ical
tre
atm
ent (
AR
Vs)
. (C
ompl
ianc
e? P
rofit
s?)
Eco
nom
ics
172:
Lec
ture
11
46
Wha
t can
pub
lic p
olic
y do
abo
ut H
IV/A
IDS
?
(1)
Test
ing
peop
le, i
nfor
m th
em o
f the
ir H
IV s
tatu
s
(2)
Con
dom
dis
tribu
tion
(3)
Pub
lic h
ealth
info
rmat
ion
cam
paig
ns (e
.g.,
Uga
nda)
(4)
Reg
ulat
e pr
ostit
utio
n
(5)
Sub
sidi
ze tr
eatm
ent f
or a
nti-r
etro
vira
l med
ical
tre
atm
ent (
AR
Vs)
. (C
ompl
ianc
e? P
rofit
s?)
(6)
Dev
elop
men
t of a
n H
IV v
acci
ne
Eco
nom
ics
172:
Lec
ture
11
47
�Fo
r nex
t tim
e: fi
nish
the
HIV
/AID
S s
ectio
n
Eco
nom
ics
172:
Lec
ture
11
48
Whi
tebo
ard
#1
Eco
nom
ics
172:
Lec
ture
11
49
Whi
tebo
ard
#2
Eco
nom
ics
172:
Lec
ture
11
50
Whi
tebo
ard
#3
Eco
nom
ics
172:
Lec
ture
11
51
Whi
tebo
ard
#4
Eco
nom
ics
172:
Lec
ture
11
52
Whi
tebo
ard
#5
Eco
nom
ics
172:
Lec
ture
11
53
Map
of A
frica
Eco
nom
ics
172:
Lec
ture
11
54
Map
of A
frica
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