[MUSIC] Earlier, we looked at a natural experiment in Argentina where some squatters were randomly
given the option of obtaining property rights for the land that they were squatting on.
And in that module, we looked at the effect of having the option of obtaining property
rights on children's health.
So we did an Intention-to-Treat Analysis because not all squatters actually obtained property
rights for their land.
Now that we know about instrumental variables analysis, we can actually look at the true
effect of having property rights on various outcome variables.
So instead of looking at children's health, I'm going to look at a different paper that
uses the same natural experiment to look at the effect of having property rights on various
beliefs you hold.
So the researchers went to the squatters, and asked them a series of questions.
They asked, “Do you believe that it is possible to be successful on your own or is a large
group that supports each other necessary?”
“Do you believe that having money is important to be happy?”
“In general, people who put effort end up working much better, better, worse, much worse,
than those who do not put in effort?”
“In general, in our country would you say that one can trust other people or that people
cannot be trusted?”
So the overall question is: what's the effect of having property rights on these beliefs,
on people's answers to these questions?
And this table shows the main results.
So in the notes here, we see “all columns present 2SLS Regressions” - 2SLS, two-stage
least squares, remember that's the key word for instrumental variables analysis - “Where
Property Right” - that's our treatment variable, that we want to know the effect of having
property rights on these various beliefs - “is instrumented with Property Right Availability.”
So that's our instrument.
Remember this is an analysis of non-compliance: not everyone who's given the option of obtaining
property rights did.
So our instrument is whether you were given the option of obtaining rights, Property Right
Availability.
So in each column corresponds to a different regression, a different two-stage least squares
regression for each of the four different outcome variables.
So let's just look at the first column, where we want to know people's answers: “Do you
believe that it is possible to be successful on your own or as a large group that supports
each other necessary?”
So here we see that the coefficient on property rights, the treatment variable, is 0.144,
and if we did a confidence interval using this standard error in parenthesis, we would
see that this is statistically significantly not zero.
It's positive.
This is a true causal effect of having property rights on your beliefs that it's possible
to be successful on your own, and you don't need a large group.
Now if you add some control variables, some other variables that might affect your beliefs,
the result doesn't change.
Next let's look at the second outcome, “Do you think that money is important to be happy?”
Again, we see that having property rights has a causal effect on your belief that money
is important, and the same thing's true even if we add control variables.
The third outcome, “In general, people who put in effort working end up better than people
who don’t.”
Actually, property rights don't seem to have an effect on your beliefs about that.
At least we can't tell whether it does or not, because if you do make a confidence interval,
you're going to see that the confidence interval here contains zero, so we can't tell if this
positive number is a true causal effect or is it just a statistical noise, and we see
the same thing with when once we add controls.
We get a number that's close to zero statistically.
The final outcome variable, “Can others be trusted in our country?”
It seems that having property rights makes people think that others can be trusted.
And the same thing's true if we add controls.
And this final column, all they did was combine these four outcome variables into a single
outcome variable that they called Market Beliefs, and conclude that having property rights makes
you more likely to have market beliefs in the sense of believing in the answers to these
questions.
So that's the main finding in this paper, where they use two-stage least squares to
do an instrumental variables analysis, where there is non-compliance because not everyone
actually obtains property rights when they when they are given the option.
[MUSIC].