All Our Kin: Strategies for Survival in a Black Community. C. B. Stack. New York: Harper & Row. 1974. Carol Stack wrote one of the most powerful books of the last half century about African American families. The book's power derived from its focus on the stories and the lives of persons who were struggling to manage with limited resources and who had evolved seamless methods of survival and coping strategies. Stack was not content to view the problems of impoverished African American families from an outside perspective, as had been done in the past, but chose instead to present her work from the view of the participants. She presented a sensitive view of families that has not been duplicated to this day. Stack put specific emphasis on being accepted by the families before she began interviewing them. She and her son took a long time to be accepted by the families as they gradually became participants in the day-to-day lives of the "Flats." She was sensitive to the patterns of interactions among the networks of family and friends that would have been overlooked by almost any other researcher or method of observation. The book showed how a person from another racial and economic group was able, with skill, to become an intimate part of the experience and the lives of very poor families. Her anthropological approach stands in sharp contrast to the countless attempts of others to quickly go in and pull out slices of families' lives with a preexisting conceptual framework. The African American families of the Flats were presented as they were, not from a White academic theoretical perspective that was not based on reality. Stack made many observations that allowed one to see the intricate workings of the families that "outsiders" had not been documented before. Participants were allowed to make observations about their own families' patterns of interaction and to uncover truths of family functioning based on the reality of their lives. Important data on these second-generation urban dwellers are presented in such a calm manner that one could overlook their significance to the field. The impact of the economic pressures on the men and women in the African American community show how persons can have mainstream values but are prevented from achieving them because of the lack of employment and economic security within the community. In response to the reality, Stack found that African Americans have cooperated to produce an adaptive strategy of exchanging goods and trading resources, as well as offering child care or temporary fosterage. Kinship boundaries were more elastic than they were in more affluent families because these individuals immersed themselves in a domestic network of kinfolk and fictive kin, or those who became as kin. The participants in Stack's study moved around and had loyalties to more than one household grouping at a time, making their family networks unlike the "household" structures of most American families. These networks were diffused over several kin-based households that changed frequently. The usual method of arbitrarily specifying widely accepted definitions of the family as nuclear or matrilocal may block one from seeing the world as it exists in very poor communities. Stack's observations refuted the "culture of poverty" position that had seen African Americans as having no culture or totally negative qualities of family disorganization, personal disorganization, and fatalism. Unfortunately, too many current writings on African Americans still take these same positions. The views may be the result of ignorance, naivete, or complex levels of racism that insidiously make their way into present family literature. Stack continued to reflect on the poverty of the participants' situations. By doing so, she avoided another position that is all too common-assumption that all African American families are the same, regardless of their levels of poverty or affluence. …

All Our Kin: Strategies for Survival in a Black Community

The Theory of Incentives I: The Principal-Agent Model

This chapter reviews recent theoretical work on the design of regulatory policy, focusing on the complications that arise when regulated suppliers have better information about the regulated industry than do regulators. The discussion begins by characterizing the optimal regulation of a monopoly supplier that is better informed than the regulator about its production cost and/or consumer demand for its product. Both adverse selection (“hidden information”) and moral hazard (“hidden action”) complications are considered, as are the additional concerns that arise when the regulator's intertemporal commitment powers are limited. The chapter then analyzes the design of practical policies, such as price cap regulation, that are often observed in practice. The design of regulatory policy in the presence of limited competitive forces also is reviewed. Yardstick regulation, procedures for awarding monopoly franchises, and optimal industry structuring are analyzed. The chapter also analyzes the optimal pricing of access to bottleneck production facilities in vertically-related industries, stressing the complications that arise when the owner of the bottleneck facility also operates as a retail producer.

/pdf/recent-developments-in-the-theory-of-regulation-2l0omocg1n.pdf

Recent developments in the theory of regulation

This paper measures the economic impact of social pressure to share income with kin and neighbors in rural Kenyan villages. The authors conduct a lab experiment in which they randomly vary the observability of investment returns. The goal is to test whether subjects reduce their income in order to keep it hidden. The analysis finds that women adopt an investment strategy that conceals the size of their initial endowment in the experiment, although that strategy reduces their expected earnings. This effect is largest among women with relatives attending the experiment. Parameter estimates suggest that women behave as though they expect to be pressured to share four percent of their observable income with others, and substantially more when close kin can observe income directly. Although this paper provides experimental evidence from a single African country, observational studies suggest that similar pressure from kin may be prevalent in many rural areas throughout Sub-Saharan Africa.

http://pamjakiela.com/JakielaOzier-VillageEconomies-2015-06-04.pdf

Does Africa Need a Rotten Kin Theorem? Experimental Evidence from Village Economies

This study explores the extent to which migration has contributed to improved living standards of individuals in Tanzania. Using longitudinal data on individuals, the authors estimate the impact of migration on consumption growth between 1991 and 2004. The analysis addresses concerns about heterogeneity and unobservable factors correlated with both income changes and the decision to migrate. The findings show that migration adds 36 percentage points to consumption growth, during a period of considerable growthin consumption. These results are robust to numerous tests and alternative specifications. Unpacking the findings, the analysis finds that moving out of agriculture is correlated with much higher growth than staying in agriculture, although growth is always higher in any sector if one physically moves. Economic mobility is strongly linked to geographic mobility. The puzzle is why more people do not move if returns to geographic mobility are high. The evidence is consistent with models in which exit barriers are set by home communities (through social and family norms) that prevent migration of certain categories of people.

https://papers.ssrn.com/sol3/Delivery.cfm/4798.pdf?abstractid=1318132&mirid=1

Migration and Economic Mobility in Tanzania: Evidence from a Tracking Survey

An institution found in many traditional societies is the extended family system (kin system), an informal system of shared rights and obligations among extended family for the purpose of mutual assistance. In predominantly non-market economies, the kin system is a valuable institution providing critical community goods and insurance services in the absence of market or public provision. But what happens when the market sector grows in the process of economic development? How do the members of kin groups respond, individually and collectively, to such changes? When the kin system meets the modern economy, does the kin system act as a vehicle of progress helping its members adapt, or as an instrument of stagnation holding back its members from benefiting from market development? In reality, the consequences of membership in a kin group have been varied for people in different parts of the world. Hoff and Sen characterize the conditions under which the kin system becomes a dysfunctional institution when facing an expanding modern economy. The authors first show that when there are moral hazard problems in the modern sector, the kin system may exacerbate them. When modern sector employers foresee that, they will offer employment opportunities on inferior terms to members of ethnic groups that practice the kin system. These entry barriers in the market, in turn, create an incentive for some individuals to break ties with their kin group, which hurts members of the group who stay back in the traditional sector. The authors then show in a simple migration model that if a kin group can take collective action to raise exit barriers, then even if migrating to the modern sector and breaking ties increases aggregate welfare (and even if a majority of members are expected to gain ex post, after the resolution of uncertainty about the identity of the winners and losers), a majority of agents within a kin group may support ex ante raising the exit barrier to prevent movement to the modern sector. This result is an example of the bias toward the status quo analyzed by Raquel Fernandez and Dani Rodrik in the context of trade reform. The authors do not claim that all kin groups will necessarily exhibit such a bias against beneficial regime changes. But they provide a clear intuition about the forces that can lead to the collective conservatism of a kin system facing expanding opportunities in a market economy-forces that can lead the kin group to become a poverty trap for its members.

/pdf/the-kin-system-as-a-poverty-trap-4u6fhfs6nw.pdf

The kin system as a poverty trap

The authors consider a multi-community city where community quality is linked to residents' civic efforts, such as being proactive in preventing crime and ensuring the quality of publicly provided goods. Homeownership increases incentives for such efforts, but credit market imperfections force the poor to rent. Within-community externalities can lead to segregated cities-with the rich living with the rich in healthy homeowner communities, and the poor living with the poor in dysfunctional renter communities. The pattern of tenure segregation across communities in the United States accords well with the study's prediction. The authors analyze alternative tax-subsidy policies to alleviate inefficiencies in the housing market and identify the winners and losers under such policies.

/pdf/homeownership-community-interactions-and-segregation-3atk3xtmod.pdf

Homeownership, community interactions, and segregation

We study the Covid pandemic in the Indian state of Kerala, and document the state's remarkable success in containing the pandemic's first wave. By identifying Kerala's initial conditions when it was hit by the pandemic, and different components of the state's Covid policy, we conclude: While being subject to resource constraints faced by an Indian state located in a federal structure, Kerala contained its first Covid wave by preemptively formulating a comprehensive set of public actions-government actions that were supported and complemented by the state's citizens. This was achieved by leveraging and reinforcing the citizen's public trust in the state. Specifically, the state's pandemic response contained supportive measures to ensure that poor lives were not pitted against rich lives; rather, the aim was to protect all lives and livelihoods.

/pdf/containing-a-pandemic-with-public-actions-and-public-trust-3t1bj3axfi.pdf

Containing a pandemic with public actions and public trust: the Kerala story.

A buyer with private information regarding marginal valuation bargains with a seller to determine price and quantity of trade. Depending on parameter values, a high-valuation buyer wants either to reveal information to create value or to conceal it to capture value. In the first case, equilibrium trades are efficient. In the second case, the low-valuation buyer purchases less than her efficient quantity, and there can be a one-period delay in trade. The quantity distortion is the only inefficiency that persists when time between offers approaches zero. There exist equilibria that are independent of the seller's prior beliefs.

Multidimensional Bargaining under Asymmetric Information

Sellers of consumer durables often provide financing to customers. This paper shows that when customers desire consumption smoothing and when financial markets are imperfect, a seller can find it optimal to offer a menu of deferred-payment plans. A monopolist seller price discriminates among customers with different intertemporal income profiles by making such menu offers, and the interest rate on the seller credit can be significantly lower than the market borrowing rate. Seller financing can be an equilibrium outcome in a game where sellers and banks with market power choose payment plans and interest rates strategically.

Arijit Sen

Papers

The kin system as a poverty trap

Homeownership, community interactions, and segregation

Containing a pandemic with public actions and public trust: the Kerala story.

Multidimensional Bargaining under Asymmetric Information

Seller Financing of Consumer Durables