Ethan Ligon

• University of California, Berkeley

Frequent measurement of poverty is challenging because measurement often relies on complex and expensive expenditure surveys that try to measure expenditures on a comprehensive consumption aggregate. This paper investigates the use of consumption “subaggregates” instead. The use of consumption subaggregates is theoretically justified if and only if...

This paper studies informal risk-sharing regimes in a unified framework by examining households’ intertemporal consumption behavior. We exploit a theoretically-consistent link between interest rates and cross-sectional consumption moments to test alternative risk-sharing models without requiring data on interest rates or assuming a restriction to e...

The availability of digital payment technologies (such as internet banking, mobile money, and credit/debit cards) has rapidly increased in the developing world, and is a cornerstone for financial inclusion initiatives in developing countries. Despite significant efforts to promote digital payments, rates of adoption remain modest in some low-income...

Does the sectoral composition of aggregate economic growth affect poverty? We ask whether agricultural growth in developing countries increases the expenditures of poorer households more than growth in other sectors. While some reduced form analyses have tackled this question using either country-level time series data, regional panel data for one...

We conduct dictator-type games in rural Paraguay; different treatments involve manipulating players' information and choice sets. From individuals' choices in the games, we draw in-ferences regarding the sorts of impediments to trade restricting villagers' ability to share. We rule out full insurance, hidden in-vestment alone, and limited commitmen...

Frisch demands depend on prices and a multiplier λ associated with the consumer’s budget constraint. The case in which demands are separable in λ has been the case of greatest empirical interest, since latent variable methods can be adopted to control for consumer wealth when estimating demands. Subject only to standard, modest, regularity conditio...

We complete the characterization of two Frisch demand systems first developed by Browning, Deaton and Irish (1985), and show that that these systems (i) do not restrict intertemporal substitution; but (ii) imply momentary utility functions which are additively separable in consumption. These utility functions turn out to take the well-known exponen...

Frequent tracking of poverty is a challenge, as poverty measures often rely on complex and expensive consumption expenditure surveys. We investigate if reduced consumption ag- gregates, theoretically and empirically, can be used to track poverty between comprehensive consumption expenditure surveys. We show theoretically how reduced aggregates that...

0.1. Introduction. As a normative matter, what is the ultimate goal sought by development economists? Broadly, we seek to improve the human condition by changing the allocation of resources, or (less directly) perhaps by changing the manner in which resources are allocated. Since we wish to improve the human condition, it makes sense to

What motivates people in rural villages to share? We first elicit a baseline level of sharing using a standard, anonymous dictator game. Then using variants of the dictator game that allow for either revealing the dictator's identity or allowing the dictator to choose the recipient, we attribute variation in sharing to three dierent motives. The fi...

It is a commonplace observation that risk-averse farmers ought to prefer less risk. In this paper, we provide three qualifications to this commonplace. First, we note that (properly defined) “less risk” need not imply “smaller variance.” Second, we note that when farmers produce under contract, there may be an important tension between risk and inc...

The federal government has developed a large number of programs to insure various “specialty crops” over the last two decades; a given program is peculiar to a particular county and crop. This development has been particularly notable in California, because of its size and the diversity of crops produced there.If the extension of federal crop insur...

It is a commonplace observation that risk-averse farmers ought to prefer less risk. In this paper, we provide three qualifications to this commonplace. First, we note that (properly defined) “less risk” need not imply “smaller variance.” Second, we note that when farmers produce under contract, there may be an important tension between risk and inc...

We describe a measure of welfare, "vulnerability", which measures the difference between the highest feasible average level of utility in a population given aggregate resources, and the actual average level of utility. This measure can be decomposed into two components, related to inequality and to risk. We provide methods for computing vulnerabili...

Using data on individual consumption from farm households in the Philippines, we construct a direct test of risk-sharing within the household. We contrast the efficient outcomes predicted by the unitary household model with the outcomes we might expect if food consumption delivers not only utils, but also nutrients affecting future productivity. Th...

Ethan Ligon focuses on risk management in the cooperative contract and quality differentiation in agricultural cooperatives. Agricultural cooperatives have long played an important role in helping their members manage risk. However, agricultural cooperatives seem not to be particularly good at helping their members to manage production risk, which...

This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...

Agents increase their expected utility by using state-contingent transfers to share risk; many institutions seem to play an important role in permitting such transfers. If agents are suitably risk-averse, then in the absence of any frictions the benchmark Arrow–Debreu model predicts that all risk will be shared, so that idiosyncratic shocks will ha...

Over the last several decades, the World Bank has accumulated a large number of datasets from a large number of countries which are based on household-level surveys, statistically representative of the populations of those countries, and which include data on non-durable expenditures. These data on expenditures can be used to measure economic welfa...

Despite the large and growing number of humanitarian emergencies, there is very little economic research on the impact of refugees and internally displaced people on the communities that receive them. This paper analyzes the impact of the refugee inflows from Burundi and Rwanda in 1993 and 1994 on host populations in Western Tanzania. The analysis...

Changes in poverty rates within a country, whether due to globalization or some other source, can be usefully thought of as reflecting either changes in aggregate resources (growth) for the country as a whole, or changes in the within-country distribution of these resources (inequality). Over the last twenty years China has experienced huge rates o...

Considering the agricultural contracts, a systematic data collection is believed that can help to build further knowledge and can support more specific research projects as need. There is no viable alternative for learning about the nature and importance of contracting in agriculture. However, collecting data from individual firms contracting parti...

The material herein contained is supplementary to the article name in the title and published in the American Journal of Agricultural Economics, Volume 89, Number 5, December 2007.

It has been widely observed that China’'s break-neck growth has not been equally shared between rural and urban areas, with urban households' enjoying a much larger proportion. To further test whether regional inequality exists within urban areas, we measure urban households’ vulnerability in a risky environment and decompose this measure to...

The notion of "globalization" implies future change, and the prospect of these future changes seems likely to increase the uncertainty faced by poor households in developing countries. In this paper we use data on the changes in Lorenz curves over the last fifty years for a sample of 34 (mostly developing) countries. Treating each country-quintile-...

Using data on individual consumption expenditures from a sample of farm households in the Philippines, we construct a direct test of the risk-sharing implications of the collective house-hold model. We are able to contrast the efficient outcomes predicted by the collective household model with the outcomes we might expect in environments in which f...

The structure of many applied quasi-experiments generates two control groups. This paper shows that by matching to the second control across the same space which assigns treatment status, we can test and relax the assumptions required for the estimation of treatment effects. By varying the number of matches used, the standard difference-in-differen...

“Contractual interlinkages” in the rural communities of developing countries may be a key element of informal insurance when information is incomplete, and may influence the evolution of the distribution of resources. The introduction of “modern” credit markets may undermine these interlinkages, and consequently limit the usefulness of informal ins...

A number of researchers have recently proposed a variety of different 'vulnerability' measures designed to capture the welfare consequences of risk for poor households, and also proposed a variety of different approaches to estimating these various measures of household vulnerability. However, it's possible to 'mix-and-match' estimators and measure...

This paper develops a dynamic model of household bargaining and uses it to motivate an empirical analysis of the impact changes in Canadian laws regarding the allocation of family assets upon divorce on female suicide. Using time series data, we show that in Ontario, the passage of Canadian legislation that improved women’s rights to assets upon di...

Traditional poverty measures neglect several important dimensions of household welfare. In this paper we construct a measure of ‘vulnerability’ which allows us to quantify the welfare loss associated with poverty as well as the loss associated with any of a variety of different sources of uncertainty. Applying our measure to a panel dataset from Bu...

This paper uses extensive data on production outcomes for processing tomato growers in California to examine the efficacy of explicit incentives observed in grower-processor contracts. Our data include all deliveries of tomatoes to some 51 processors over a period of 7 years in which at least 65 unique types of contracts are employed. Results indic...

Risk-averse farmers in the produce industry grow a product whose market price is often quite unpredictable. Shippers or other intermediaries shield the farmer from much of this price risk; however, actual contracts between growers and shippers vary considerably across commodities in the residual price risk growers face. We hypothesize that imperfec...

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This chapter provides a cardinal measure of risk consistent with the ordinal notion of risk developed by Rothschild and Stiglitz (1970). It presents a simple method for decomposing this measure of risk into risks due to aggregate shocks, observable idiosyncratic shocks, and unobservable shocks. It develops an estimator for risk-sharing regressions....

Traditional poverty measures neglect several important dimensions of household welfare. In this paper we construct a measure of 'vulnerability' which allows us to quantify the welfare loss associated with poverty as well as the loss associated with any of a variety of different sources of uncertainty. Applying our measure to a panel dataset from Bu...

Recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income, thus rejecting the hypothesis of full risk-pooling. We attempt to explain these observations by adding limited commitment as an impediment to risk-pooling. We provide a general...

Rates of long-run economic growth are not independent across countries. To account for this dependence we decompose the spatial covariance function of growth rates into a function of each country's own observable characteristics, its unobservable characteristics, and cross-country spillovers. We use original data on economic distance to structure o...

An agency model of contracts used in California's processing-tomato industry is estimated in three stages. We first estimate growers' stochastic production possibilities, and then, for a given vector of preference parameters, compute an optimal compensation schedule. Finally, we compare computed compensations with actual compensations and choose pr...

We study efficient insurance arrangements when there is complete information but limited commitment because only limited penalties can be imposed if households renege on their promises. Insurance arrangements must therefore take into account the fact that households will renege if benefits from doing so outweigh costs. Using a general dynamic model...

Much recent empirical work on intra-household allocation uses the axiomatic Nash Bargaining model to make predictions about how the distribution of consumption within the household will respond to individuals' income shocks. However, one of the basic axioms underlying this approach is that allocations will be Pareto optimal, so forward-looking, ris...

Abstract In this paper we focus on mechanisms of coordination in agricultural contracts. Our approach is intended to advance understanding of social relations of production and distribution of power in agrofood systems. Through an analysis of contracts between farmers and intermediaries (e.g., processors, shippers, consignment agents) for Californi...

Processors, packer-shippers, integrators, and a variety of third-parties engage in a wide variety of different kinds of grading, intended to summarize quality characteristics of different kinds of foodstuffs. There are two ways in which these grading characteristics may be imperfect. First, they may fail to perfectly capture the variation in qualit...

Recent research on household ‘vulnerability’ has led to an increased appreciation of the welfare costs of risk. Measuring the risk borne by a particular household has generally involved the use of panel data, and in particular the use of time series variation in household expenditures to estimate the risk borne by the household in any given period....

Relative performance schemes such as tournaments are commonly used in markets for a variety of livestock and processing commodities, while explicit versions of these schemes are rarely used in markets for fresh fruits and vegetables and specialty grains. We show how contracts for these latter commodities do in fact provide relative performance ince...

This paper estimates an agency model of contracts used in California's processing-tomato industry. Model estimation proceeds in three stages. We first estimate growers' stochastic production possibilities, and then, for a given vector of preference parameters, compute an optimal compensation schedule. Finally, we compare computed compensations with...

We examine a dynamic model of mutual insurance when households can also engage in self insurance by storage. We assume that there is no enforcement mechanism, so that any insurance is informal, and must be self-enforcing. We show that consumption allocations satisfy a modified Euler condition and that an enhanced storage technology can either impro...

This article examines the structure of contractual relations between growers and first handlers in California fruit and vegetable markets. Evidence on existing structures is collected from on-site interviews and from a small mail survey of market intermediaries who contract with independent growers. Four generic instruments are identified—input con...

When monitoring or enforcement is difficult, governments may find it impossible to manage village forest commons directly. Village-level institutions might be better able to manage these commons, yet villagers' management objectives may not coincide with those of the state. This article considers the effects of two different government policies on...

. We study e#cient insurance arrangements when there is complete information but limited commitment because only limited penalties can be imposed if households renege on their promises. Insurance arrangements must therefore take into account the fact that households will renege if benefits from doing so outweigh costs. Using a general dynamic model...

Are firms and households constrained in the use of aproductive input? Theoretical approaches to this question range from exogenously imposed credit allocation rules to endogenous market failures stemming from some sort of limited-commitment or moral-hazard problem. However, when testing for constraints, researchers often simply ask firms or househo...

We hypothesize that imperfect quality measurement in contracts for fresh fruits and vegetables results in a moral-hazard problem, and that the final price of the produce provides additional information regarding quality. As a consequence, growers are not shielded from all price risk. This hypothesis is tested informally with observations on actual...

Rates of long-run economic growth are not independent across countries. To account for this dependence we decompose the spatial covariance function of growth rates into a function of each country's own observable characteristics, its unobservable characteristics, and cross-country spillovers. We use original data on economic distance to structure o...

Arrangements for achieving efficient risk-sharing vary depending on the information available to agents in the economy. The usual Euler equation restricts efficient allocations in an economy which obeys the permanent income hypothesis, while efficient allocations in an economy with private information and long-term contracts satisfy a symmetric res...

In this paper we discuss techniques for rapidly computing the equilibria of a class of dynamic linear‐quadratic games involving the extraction of a common property resource. Though this class of games has been much studied, the search for equilibria of these games has only been attempted in special cases, and analysis of the game has tended to focu...

[eng] Transportation costs and monopoly location in presence of regional disparities. . This article aims at analysing the impact of the level of transportation costs on the location choice of a monopolist. We consider two asymmetric regions. The heterogeneity of space lies in both regional incomes and population sizes: the first region is endowed...

We examine whether the spread of an exporting strategy can be characterized as a diffusion process using a general framework that accounts for attrition and changes in the pool of potential adopters and allows the diffusion rate to vary according to firm and market characteristics. Our findings indicate that the diffusion of exporting is described...

Introduction Simulata is the name I've given to an imaginary village, modelled very loosely after the ICRISAT villages in India. The life of the inhabitants of Simulata is pretty simple; all they ever do is grow grain and eat it. They do this every period, forever. 1 The sole inputs to grain production are land and labor, and output is uncertain. S...

Using data on individual consumption and earnings from the Philippines, we test for efficient or constrained-efficient risk sharing within the household by constructing a dynamic model of intrahouse-hold food allocation under uncertainty distinguishing between the nu-trients supplied by a particular food bundle and the quality of that bun-dle. We c...

We conduct field experiments in rural Paraguay to measure the value of reciprocity within social networks in a set of fifteen villages. These experiments involve conducting dictator- type games; different treatments involve manipulating the information and choice that individuals have in the game. These different treatments allow us to measure and...

Using data on individual consumption expenditures fromasampleoffarmhouseholdsinthePhilippines,weconstruct a direct test of the unitary household model. We are able to con- trast the e-cient outcomes predicted by the unitary household model with the constrained e-cient outcomes we might expect if there was a hidden action problem within the househol...

1 Preview Motivation • Vulnerability decreases current wellbeing, impacts on behavior, may lead to poverty in future. • Measures of vulnerability have to quantify probabilities. • Subjective probabilities may help to quantify probabilities.