The Social Impact of Private Property

We focus a lot on the material differences between the so-called "rich" and the so-called "poor." We are inundated with news of the growing income gap and our brothers and sisters in the developing world are all-too-often defined by how many dollars a day they have in their pockets. But the real gaps, the real injustices, are the immaterial ones below the surface.

In Episode 3 of the PovertyCure DVD Series, we dig into the foundations upon which prosperous societies have been built. We see how things like property rights and rule of law are essential and most often overlooked elements of development. In the following video clip, you'll hear from Harvard-trained, Argentinian economist Ernesto Schargrodsky as he shares his findings on the social impact of private property rights on families and communities. Take a listen.

PovertyCure Clip: "Social Impact of Private Property" [Episode 3]

Here's a fuller transcript from Schargrodsky's discussion on what happens when people who didn't have private property get private property:

We found that children in the titled houses are more likely to go into secondary school. In Argentina in these areas, most kids go to primary school, so there are no difference in attendance to primary school, but they are more likely to go into secondary and tertiary education. They have a lower school absenteeism. They have better health, for example, better anthropometrics. They show lower teenage pregnancies. So, the next generation show several advantages in the titled parcels. We have a group of kids now in the titled parcels that, one day, they are going to receive a house, an inheritance from their parents. But in addition to that, they were raised in better houses, they were raised in smaller families, and in these smaller families, they got better education and better health.

We found that the people in the titled parcels, they trust each other more. They understand, I mean, they believe that material progress help to be happy. They believe more in meritocracy and also they are perhaps more individualistic, which might be surprising because they were successful in the land occupation by being a large group; they couldn’t have done that by their own. But now they believe that you can progress in life by your own. And what is very interesting is that we also ask these very same questions to an average Buenos Aires population. So we took random citizens, I mean random households, and we ask the same belief. And even the area still very poor, the people that got titles, they have a set of belief which are very similar to the belief by the Buenos Aires household, than relative to the belief of the untitled populations. So, land title integrated them to the average population and now they share, they seem to share the belief and the values of the more average population, although they are still quite, quite poor.

Hernando de Soto was very influential with his idea that land titling could be a main tool to reduce poverty. The main idea is that there are millions of people in urban slums in the cities around Latin America, Asia, and Africa, and that these people, they cannot use the land that they possess and occupy as a collateral, because of the lack of titles.

Wealth creation is the true form of  poverty alleviation, and this experience of land titling shows that if it allows people to invest more and if it allows the people to educate their children more, that’s a promising way of poverty alleviation. I think land titling is a very powerful anti-poverty policy, not through the shortcut of access to credit, but through the positive incentives on investment, on children education, on child health, that it’s going to improve the lives of the future generations.


Visit the PovertyCure DVD Series page for more information and video clips.

About Ernesto Schargrodsky

Ernesto Schargrodsky received his Ph. D. in Economics from Harvard University in 1998. He is the President of Universidad Torcuato Di Tella in Buenos Aires, Argentina. He has been the Edward Laroque Tinker Visiting Professor at Stanford University and the De Fortabat Visiting Scholar at Harvard University. His research includes studies of the impact of police deployment on crime, the effect of the privatization of water companies on child mortality, the analysis of popular support for privatizations, the relationship between bureaucratic wages and corruption, the effect of using electronic systems for the payment of welfare programs, the impact on recidivism of the use of electronic monitoring devices instead of incarceration, and the effects of awarding land titles to squatters. His work has been published at the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Law and Economics, Journal of Public Economics, and Journal of Development Economics, inter alia.

He has received the 2009 Houssay Award for Researcher in the Social Sciences of the Ministry of Science and Technology of Argentina, the 2005 Houssay Award for Young Researcher in the Social Sciences of the Ministry of Education of Argentina, and the 2008 Premio Consagración from the National Academy of Economic Sciences of Argentina. He has been awarded fellowships, grants and prizes from Harvard University, Stanford University, Inter-American Development Bank, World Bank, United Nations, Tinker Foundation, International Finance Corporation, Financial Times, PREAL, CONICET of Argentina, and the Global Development Network.

Jan 212013
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