Continued Existence of Cows Disproves Central Tenets of Capitalism?

40 Pages Posted: 5 Sep 2013 Last revised: 16 Jan 2014

See all articles by Santosh Anagol

Santosh Anagol

University of Pennsylvania - Wharton School of Business - Business Economics and Public Policy Department

Alvin Etang

Yale University - Economic Growth Center

Dean S. Karlan

Yale University; Innovations for Poverty Action; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: January 2014

Abstract

We examine the returns from owning cows and buffaloes in rural India. We estimate that when valuing labor at market wages, households earn large, negative average returns from holding cows and buffaloes, at negative 64% and negative 39% respectively. This puzzle is mostly explained if we value the household’s own labor at zero (a stark assumption), in which case estimated average returns for cows is negative 6% and positive 13% for buffaloes. Why do households continue to invest in livestock if economic returns are negative, or are these estimates wrong? We discuss potential explanations, including labor market failures, for why livestock investments may persist.

Keywords: savings, investment, profits, livestock, labor markets

JEL Classification: E21, M4, Q1, O12

Suggested Citation

Anagol, Santosh and Etang, Alvin and Karlan, Dean S., Continued Existence of Cows Disproves Central Tenets of Capitalism? (January 2014). Yale University Economic Growth Center Discussion Paper No. 1031; Yale Economics Department Working Paper No. 122. Available at SSRN: https://ssrn.com/abstract=2321168 or http://dx.doi.org/10.2139/ssrn.2321168

Santosh Anagol (Contact Author)

University of Pennsylvania - Wharton School of Business - Business Economics and Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

Alvin Etang

Yale University - Economic Growth Center ( email )

New Haven, CT 06520
United States

Dean S. Karlan

Yale University ( email )

Box 208269
New Haven, CT 06520-8269
United States

Innovations for Poverty Action ( email )

1731 Connecticut Ave, 4th floor
New Haven, CT 20009
United States

Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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