DP14876 Development Policy through the Lens of Social Structure

Author(s): Oriana Bandiera, Robin Burgess, Erika Deserranno, Imran Rasul
Publication Date: June 2020
Keyword(s): agriculture extension, Development Policy, Social Structure, social ties
JEL(s): D80, O10, O20
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14876

Abstract This paper studies how the social structure of village economies affects policy implementation by local agents. We randomly select one of two viable candidates to deliver an agricultural extension program in rural Ugandan villages. We show that delivery agents favor their own social ties over ex-ante identical farmers connected to the other (non-selected) candidate and that this is inconsistent with output maximization or targeting the poorest. Favoritism disappears when the potential delivery agents belong to the same social group. Using the randomized allocation of the program across villages, we show how unobserved social structures explain the variation in delivery rates and program effectiveness that we often observe in the data.