Tuesday, March 18, 2014

PacDev 2014

I finished spring break with the PacDev (Pacific Conference for Development Economics) at UCLA on Saturday. My favorite two papers were "The Political Legacies Of Combat: Attitudes Towards War And Peace Among Israeli Ex-Combatants" by Grossman, Manekin, and Miodownik, and "The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth" by Hsiang and Jina, which show that combat exposure causes Israeli soldiers to be anti-reconciliation with Palestine and more prejudiced against Palestinians, and typhoons are responsible for a crap-ton (that's the scientific term) of long-term GDP loss. The latter is maybe not surprising to the lay person, but this seems like a pretty strong paper in the "geography" column in the geography vs. institutions debate. I haven't read the papers yet, but the identification methods of instrumental variables in the first paper and panel data and fixed effects in the second seemed reasonable in the short presentations at the seminar.

Does combat experience foster hardliner approaches to conflict, diminishing the likelihood of reconciliation? We exploit the assignment of health rankings determining combat eligibility in the Israel Defense Forces (IDF) to examine the effect of combat exposure on support for peaceful resolution of conflict. Given the centrality of the Israeli-Palestinian conflict to global affairs, and with no resolution to the conflict currently in sight, the question of the political consequences of combat becomes all the more pressing. We find that exposure to high-intensity combat hardens attitudes towards the rival and reduces support for negotiation and compromise. Importantly, these attitudes translate directly into voting behavior, such that combatants are more likely to vote for hardliner parties. These findings cast doubt on research highlighting the benign effects of combat and underscore the importance of combatant reintegration for the transition from conflict to peace.

Do natural disasters have a causal e ffect on economic development? Reconstructing every country's physical exposure to the universe of tropical cyclones during 1950-2008, we exploit year-to-year variation in cyclone strikes to identify the e ect of disasters on long-run growth. The data reject long-standing hypotheses that disasters stimulate growth via \creative destruction" or that short- run losses disappear following migrations or transfers of wealth. Instead, we fi nd robust evidence that national incomes decline, relative to their pre-disaster trend, and do not recover within twenty years. This result is globally valid, holding for countries of all types, and is supported by non- income variables as well as global patterns of climate-based adaptation. National income loss arises from a small but persistent suppression of annual growth rates spread across the fteen years following disaster, generating large and signifi cant cumulative e ffects: a 90th percentile event reduces per capita incomes by 7.4% two decades later, effectively undoing 3.7 years of average development. The gradual nature of these losses render them inconspicuous to a casual observer, however simulations indicate that they have dramatic in uence over the long-run development of countries that are endowed with regular or continuous exposure to disaster. Linking these results to projections of future cyclone activity, we estimate that under conservative discounting assumptions the present discounted cost of \business as usual" climate change is roughly $9.7 trillion larger than previously thought.

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