Olken wonders whether economic development and the path to democratization are shaped more by broad historical forces or by the actions of specific leaders—be they democratically elected prime ministers or thuggish authoritarians. With the assistance of his frequent research partner Ben Jones, an economist at Northwestern, Olken has challenged broadly held assumptions by publishing a pair of papers asking how heads of state affect economic outcomes and democracy.
In “Hit or Miss? The Effect of Assassinations on Institutions and War,” Olken and Jones looked at the effects of political assassination, using a strict empirical methodology that takes into account economic conditions at the time of the killing and what Olken calls a “novel data set” of assassination attempts, successful and unsuccessful, between 1875 and 2004.
Olken and Jones discovered that a country was “more likely to see democratization following the assassination of an autocratic leader,” but found no substantial “effect following assassinations—or assassination attempts—on democratic leaders.” They concluded that “on average, successful assassinations of autocrats produce sustained moves toward democracy.” The researchers also found that assassinations have no effect on the inauguration of wars, a result that “suggests that World War I might have begun regardless of whether or not the attempt on the life of Archduke Franz Ferdinand in 1914 had succeeded or failed.”
In “Do Leaders Matter? National Leadership and Growth since World War II,” Olken and Jones explored whether “individual political leaders make a difference in economic growth.” This is tricky business for the researcher because, as Olken explains, a country’s economic situation can affect the election of a leader: when the economic outlook is good, for instance, presidents are more likely to be reelected. So Olken and Jones looked at 57 leaders who died in office from accidents or natural causes and “found big changes in growth when autocratic leaders die in office—both positive and negative,” but no substantial change when democratic leaders died in office. “The results suggest,” they write, “that individual leaders can play crucial roles in shaping the growth of nations,” provided they are ruling with minimal or nonexistent checks and balances to their power (think Augusto Pinochet or Robert Mugabe).
A significant portion of Olken’s field research is conducted in Indonesia, a country for which he has much affection: he has previously lived there, speaks the language, and understands the country’s social mores.
So when he decided to test the validity of the much-debated “bowling alone” theory—Harvard political scientist Robert Putnam’s argument that television, among other “individualizing” cultural phenomena, has had a negative effect on the social fabric of the West—he found himself in Indonesia, a country not affected by many of the cultural externalities that compromise Putnam’s American-based study.
According to Olken’s research, in Indonesia, where TV coverage isn’t yet universal, one finds that “better signal reception, which is associated with more time spent watching television and listening to radio, is associated with substantially lower levels of participation in social activities and with lower self-reported measures of trust.” This, he notes, has had a deleterious effect on political and social participation: “The main results suggest that each additional channel of television reception is associated with 7 percent fewer social groups existing in the village, and with each adult in the village attending 12 percent fewer group meetings.” That would seem to confirm Putnam’s thesis. But the results were nuanced. Olken noted that “despite the impact on social capital, improved [TV] reception does not appear to affect village governance, at least as measured by discussions in village-level meetings.”
In his paper “The Simple Economics of Extortion,” co-written with Patrick Barron of the World Bank, Olken again traveled to Indonesia to study “if the way in which we think about pricing for firms also applies to corrupt officials.” In other words, do the crooked respond to market forces in the way a corporation would? To test this, Olken and Barron looked at the number of roadside checkpoints—which act, essentially, as illegal toll booths where the motorist is required to pay a bribe—in Aceh, a region on the northwestern tip of Sumatra long engaged in a guerilla war with separatist rebels.
Field Experiments to Investigate Institutional Designs and Impact