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Continued Existence of Cows Disproves Central Tenets of Capitalism?

Author

Listed:
  • Anagol, Santosh

    (University of PA)

  • Etang, Alvin

    (Yale University)

  • Karlan, Dean

    (Yale University)

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.

Suggested Citation

  • Anagol, Santosh & Etang, Alvin & Karlan, Dean, 2014. "Continued Existence of Cows Disproves Central Tenets of Capitalism?," Working Papers 122, Yale University, Department of Economics.
    • Handle: RePEc:ecl:yaleco:122
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why invest in cows if their return is negative?
      by Economic Logician in Economic Logic on 2013-10-21 20:21:00

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    Cited by:

    1. Orazio Attanasio & Britta Augsburg, 2014. "Holy Cows or Cash Cows?," NBER Working Papers 20304, National Bureau of Economic Research, Inc.
    2. Karlan, Dean S. & Knight, Ryan & Udry, Christopher R., 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Center Discussion Papers 133405, Yale University, Economic Growth Center.
    3. Cynthia Kinnan & Shing-Yi Wang & Yongxiang Wang, 2015. "Relaxing Migration Constraints for Rural Households," Working Papers id:7047, eSocialSciences.
    4. Walker, Sarah, 2020. "Historical legacies in savings: Evidence from Romania," Journal of Comparative Economics, Elsevier, vol. 48(1), pages 76-99.
    5. Laureti, Carolina & Szafarz, Ariane, 2023. "Banking regulation and costless commitment contracts for time-inconsistent agents," Economic Modelling, Elsevier, vol. 129(C).
    6. Hasanain, Syed Ali & Khan, Muhammad Yasir & Rezaee, Arman, 2023. "No bulls: Experimental evidence on the impact of veterinarian ratings in Pakistan," Journal of Development Economics, Elsevier, vol. 161(C).
    7. Karlan, Dean & Osman, Adam & Zinman, Jonathan, 2016. "Follow the money not the cash: Comparing methods for identifying consumption and investment responses to a liquidity shock," Journal of Development Economics, Elsevier, vol. 121(C), pages 11-23.
    8. Ojo, Kehinde Elizabeth & VanSickle, John J. & Thapa, Bhawna, 2022. "Nepal's Sacred Cattle: Profitability Analysis and Policy Implications," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 19(1), June.
    9. repec:spo:wpmain:info:hdl:2441/4g0qd281j48jib2k4okap9f4eo is not listed on IDEAS
    10. Kate Ambler & Alan de Brauw & Susan Godlonton, 0. "Cash Transfers and Management Advice for Agriculture: Evidence from Senegal," The World Bank Economic Review, World Bank, vol. 34(3), pages 597-617.
    11. Esther Gehrke & Michael Grimm, 2018. "Do Cows Have Negative Returns? The Evidence Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 66(4), pages 673-707.
    12. Guillaume Allègre & Xavier Timbeau, 2014. "The critique of capital in the twenty first century : in search of the macroeconomic foundations of inequality," Documents de Travail de l'OFCE 2014-10, Observatoire Francais des Conjonctures Economiques (OFCE).
    13. Macchiavello, Rocco & Casaburi, Lorenzo, 2015. "Firm and Market Response to Saving Constraints: Evidence from the Kenyan Dairy Industry," CEPR Discussion Papers 10952, C.E.P.R. Discussion Papers.
    14. Ojo, Kehinde Elizabeth & VanSickle, John J. & Thapa, Bhawna, . "Nepal’s Sacred Cattle: Profitability Analysis and Policy Implications," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 19(01).
    15. Sudha Narayanan & Digvijay S Negi & Tanu Gupta, 2023. "Separability, spillovers, and segmented markets : Evidence from dairy in India," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 884-899, November.
    16. Argent, Jonathan & Augsburg, Britta & Rasul, Imran, 2014. "Livestock asset transfers with and without training: Evidence from Rwanda," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 19-39.
    17. Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 597-652.
    18. Oriana Bandiera & Robin Burgess & Narayan Das & Selim Gulesci & Imran Rasul & Munshi Sulaiman, 2017. "Labor Markets and Poverty in Village Economies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 811-870.
    19. Anagol, Santosh, 2017. "Adverse selection in asset markets: Theory and evidence from the Indian market for cows," Journal of Development Economics, Elsevier, vol. 129(C), pages 58-72.
    20. repec:cep:stieop:58 is not listed on IDEAS

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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