06.06.2013 - Hoyt Bleakley

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Up from Poverty? The 1832 Cherokee Land Lottery and the Long-Run Distribution of Wealth

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06.06.2013 - Hoyt Bleakley

  1. 1. Hoyt BleakleyUniv. of ChicagoJoseph FerrieNorthwestern Univ.June 2013Up from Poverty?Long-run effects of the 1832 CherokeeLand Lottery on Wealth
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  78. 78. Eligibilityl  The land in this area was made available to settlers ofEuropean descent by the eviction of the Cherokeesin that areal  Every adult male who had been resident for at leastthree years in Georgia by 1832 was eligible to onedraw in this lotteryl  Widows and orphans were eligible for two draws, butwe drop them (can’t identify them in 1850)
  79. 79. Eligibility, part 2.l  Revolutionary War veterans were also eligible formultiple draws, but we drop them as well (theycannot be identified in 1850 when we createtreatment and control groups).l  But most were dead by 1850 anywayl  A group of highwaymen (members of “The PonyClub”) were also excludedl  The Cherokee Land was surveyed and subdividedl  The lottery commences…
  80. 80. 1832 1850Eligible man[wife]≥1 kids 1829-32[post-lotto kids]Wealth inReal estateSlaveholdingsGa ✓SC ✗NC ✗
  81. 81. The Data: Georgial  Smith (1838) lists winners, parcels.l  Full-count 1850 census.l  Sample of “eligibles”. (Widespread registration.)l  N = 14,375
  82. 82. Fig. 4 Josiah Spivey and Family in 1850
  83. 83. Fig. 4 Josiah Spivey and Family in 1850
  84. 84. Fig. 4 Josiah Spivey and Family in 1850
  85. 85. Specification Checksl  Is our sample more or less likely to have won aparcel?l  For at least two counties (Columbia Oglethorpe), lists of eligibles have survived.l  In our sample, 15.5% are (1/n) matched to theSmith list. In Columbia Oglethorpe county,16.0% of the eligible names were drawn
  86. 86. Did the non-winners actually register?l  75.8K registered 1832 from{WM; 18+ age; 3+yr in Ga}l  78.0K in 1830 census{WM; 15+age; currently in Ga}l  97.2% registration rate
  87. 87. Specification Checksl  Placebo test with South Carolinal  Balancing tests on pre-lottery outcomes
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  138. 138. Analysis of Outcomes: Georgia Lotteryl  Residence. (In old Cherokee county?)l  Real-estate wealthl  Slave wealth
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  164. 164. Analysis of Outcomes: Georgia Lotteryd variables, as seen in Section 3, casts doubt on tWe return to this issue in Section 8.3 with an altequation, which we generally estimate using Oijk j ijk a k ijkY = T + BX + ⇥ + ⇥ + ⇤jrest, T , is a binary variable that denotes treatmaariables are as follows: ⇥ is a set of dummies for
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  265. 265. Quantile resultsl  Rank stabilityl  Quantile regressionsl  Compare variables by quantile of treatmentdistribution
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  316. 316. Rawls again
  317. 317. Rawls againay to vary the equity weight whenan aggregator with a constant elas¯Uj =24Xi2Zj1Njw⇢ 1⇢i35⇢⇢ 1s in our sample, j is an indicator fo
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  342. 342. ,;/.911.11.21.31.4RatioofCESAggregators(Treatment/Control).35 1 3.25 10 30 90 270 825 2500Elasticity of Substitution
  343. 343. Mechanisms?1. Life cycle2. Fixed cost3. Interaction with ability4. Risk
  344. 344. Life cycle of wealth in control sample
  345. 345. Mechanisms?1. Life cycle2. Fixed cost3. Interaction with ability4. Risk
  346. 346. Mechanisms?1. Life cycle2. Fixed cost3. Interaction with ability4. Risk
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  372. 372. Mechanisms?1. Life cycle2. Fixed cost3. Interaction with ability4. Risk
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  398. 398. Interactions?l  Own literacyl  Average characteristics of surname
  399. 399. Risk and churnl  Risk exposurel  Journalistic and semi-fictional work (Banerjee/Duflo,Boo, Wilder, Mitchell)l  Safety first (Wright, 1975)l  Walk-away farming (Ransom, 2005)
  400. 400. Risk and churnl  Compare 1850 to 1860 wealth. Corr = 0.6
  401. 401. Risk and churnl  Compare 1850 to 1860 wealth. Corr = 0.60.1.2.3.4Probabilityof1860WealthNoGreaterThanThreshold.1 .25 .5 1 2.5 5 10 20 30 50Natural Log of Total Wealth, 1850Fraction holding no more than $100 in 186095% Conf. Int.Prob. Density Function in 1850
  402. 402. Hoyt BleakleyUniv. of ChicagoJoseph FerrieNorthwestern Univ.December 9, 2012Up from Poverty?Long-run effects of the 1832 CherokeeLand Lottery on Wealth
  403. 403. Extensions / Related Workl  Placebo sample from South Carolinal  Relaxing the rank-invariance assumption in thequantile analysisl  Intergenerational effectsl  Importance of initial property allocation(follow up the place rather than the person)
  404. 404. Mapping to returns?l  Rank invariance (quantile regs)l  Compute bounds for weaker assumptions,using Markov matrix P:l  xt = xc Pl  1 = P 1l  1 P 0l  Expected returns: Py or (P-I)y, net of starting yil  Linear in P, with bounds.
  405. 405. Mapping to returns?l  Rewrite asl  A vec(P) = bl  A, b formed by Kronecker product of Identitymatrix with x’s and 1 vectors.l  1vec(P)0l  Treatment effect Δ = C’vec(P); C = kron(y’,Im)’l  Compute bounds on elements of Δ
  406. 406. Mapping to returns?l  Linear programmingl  Assumptions:1.  Bounds only2.  Ex post Pareto dominates to win (|yi)3.  FOSD to win (|yi)4.  Expected Δ positive for all yil  Feasible?l  Bounds?
  407. 407. Shocking BehaviorThe Cherokee Land Lottery of 1832and Later Life OutcomesHoyt BleakleyUniv. of ChicagoJoseph FerrieNorthwestern Univ.Spring 2013
  408. 408. Land Openingson the GeorgiaFrontierandthe CoaseTheorem in theShort- andLong-RunHoyt Bleakley(Univ. of Chicago)Joseph Ferrie(Northwestern Univ.)Spring 2013
  409. 409. Summaryl  Land Openings in “Lottery Zone” of Georgial  Initial Parcel Sizes were...l  Quite sticky for c. 80 years (one for one)l  Unstuck by c. 150 yearsl  Misallocation cost c. 20% of 1880 land value
  410. 410. Diff-in-diff estimates of β, by decade
  411. 411. Average reduction in land value−.3−.2−.101880 1890 1900 1910 1920 1930 1940 1950
  412. 412. Hoyt BleakleyUniv. of ChicagoJoseph FerrieNorthwestern Univ.Up from Poverty?Long-run effects of the 1832 CherokeeLand Lottery on Wealth
  413. 413. Bonus: simulationsl  Take a log-normal control distributionl  Perturb in various way to get simulatedtreatment distribution
  414. 414. Control
  415. 415. Constant shift in logs (illustrative only)
  416. 416. Constant shift in levels
  417. 417. Constant shift in levels, 50% takeup
  418. 418. Higher return at the low end
  419. 419. Constant shift in levels
  420. 420. Higher return at the high end

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