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April 5, 2012

Books, Journals & More

A closer look: Daniel Berkowitz & Karen Clay

berkowitzPer capita income varies widely between countries throughout the world — and even within countries, including the United States. Previous research has shown that those disparities are driven in part by political and legal institutions such as legislatures and, in particular, courts. Legislatures, for example, influence key aspects of the economy, including individual rights regarding land ownership, labor, capital and materials. Courts define and enforce those rights.

But what are the root causes of those economic disparities? And what drove the differences in political and legal institutions in the first place?

Those are the overarching questions tackled in systematic fashion in “The Evolution of a Nation: How Geography and Law Shaped the American States,” co-authored by Daniel Berkowitz and Karen B. Clay.

Berkowitz is a Pitt professor of economics who researches law and economics, comparative systems, transition economics and applied micro-economics.

Clay is an associate professor of economics and public policy at Carnegie Mellon’s Heinz School of Public Policy and Management, with an affiliation at its Tepper School of Business. She also is a faculty research fellow at the National Bureau for Economics Research and has led workshops at Pitt’s School of Law. Clay researches economic history, law and economics and demography.

Their book traces persistent economic development factors affecting the 48 contiguous American states between the mid-19th and late-20th centuries, including climate and geography; access to navigable water; occupational data (whether wealth was based on agrarian or trade systems), and the influence of early legal systems on a state’s politics. Working with datasets that intersect economics, history, geography, law and politics, the authors endeavor to explain the economic development of the individual states and how and why they differed, arguing that, based on their research model, the effects are predictable and persistent to this day.

The authors recently discussed how the book came about and the collaborative process in bringing it to fulfillment — a multi-year journey from concept to bookshelf.

“We started writing this book before my youngest child was born and he’s 8. That’s not constantly working on the book, but it was a lot of effort over those years,” Clay said. “There also was a quite long period where one or both or us wondered is this ever going to come to fruition, in part because it’s such a complicated project,” she said.

Berkowitz said the idea for the book arose in the early 2000s at a luncheon discussion with Harvard economics professor Edward Glaeser about his paper on the origins of law in England and France. That conversation stimulated the idea that the economics of the American states might be differentially influenced depending on which legal institutions from England and France, as well as other countries, were transplanted here during the colonial era.

“After the lunch I thought these are good arguments, and we could tackle these issues using the case of the United States, and Karen said that as well. We hadn’t ever really thought of that before,” Berkowitz said.

“I did say that,” Clay said. “But I also found myself saying: ‘I can’t really imagine that things like legal origins hundreds of years ago would have that much impact.’ The amazing thing was that no matter how much we beat up on the data, it really suggested there was a story there.”

So the authors wrote the precursors to “The Evolution of a Nation” — two papers on why colonial legal institutions have had persistent effects on American state constitutions and courts.

“Then the book resulted from what was really partly frustration, because there is a finite space in a journal, and these are complicated arguments,” Clay said.

Enter Princeton University Press editor Joel Mokyr, whom both authors credit as the driving force behind their book. They secured a book contract from the Princeton press and submitted the first draft but were discouraged by the initial reactions.

Clay said, “We sent a full draft and Joel said, ‘We want a lot more.’”

Berkowitz said: “We were charged with making the book more accessible. ‘Look,’ Joel said, ‘this draft is written for economists, but political scholars and historians and legal scholars should be able to read it.’”

“We had to think about that in a fairly sophisticated way,” Clay said. “It wasn’t a re-write, but we went back and replaced a lot of stuff with graphs, for example. We tried to make it less like an economist’s paper.”

“It was a lot of work,” Berkowitz added. “Also, I was in Hong Kong and Karen was at Stanford at that time, and we were trying to figure out a way to best communicate, going back and forth, so we didn’t get stuck. We did a lot of Skyping.”

He explained: “The upshot is that we didn’t take the standard route of economists. Typically, with a project in economics, you have a design, you’ve got a strategy, such as a set of results you’re looking for for identification, but we really didn’t have that here. But we saw big patterns: the civil law effect that grew to influence the judiciary across the states in so many ways. It was just fascinating. It required a big coding project on Karen’s part, once we really got into it and once it became crystal clear that who had a civil law versus who had a common law origin led to different outcomes in occupation, in the judiciary, in the legislatures, in political competition. We put a lot more time into it.”

Still, the authors faced skepticism from the publisher’s draft reviewers.

Clay said, “When I was at Stanford for a year, by then we had gotten back referees’ reports, and they basically said: ‘We don’t really believe this; we want you to fill in more of the details — or give up.’ They didn’t say it like that, but that’s what they meant. So I spent the better part of a year doing that. Stanford has extensive online and physical collections, so it was tremendously helpful.”

evol of a nationThe authors said they eventually got the hang of countermanding the reviewers’ objections, learning to add details and data that filled in certain gaps in their argument.

Clay said, “But I still think lawyers would really not like this story, and the reason for that is that most of the focus in law is on the Supreme Court or on federal courts, or federal law. So they don’t spend a lot of time thinking about variations in state courts and the way state courts operate and their impact.”

Other people were skeptical, she said, because they don’t want to believe that the American states are all that different from one another and the historical legal origins of a small number of the states seem to be sketchy, or even ambiguous.

“And I have to say that it does seem a little preposterous at first, that state judiciaries have had these enduring effects on the state economies,” Clay acknowledged. “It’s a good thing we both believed in the project. As we got into more and more into the history and as we compiled as much evidence as we could, it became harder to refute that, and we wanted to be more persuasive rather than give up. We were open to alternative explanations, but these are the things you have to account for: You have to come up with a causal factor that starts really early and that has these sorts of impacts,” she said.

Regarding the division of labor, Berkowitz said, “Putting the book together wasn’t that systematic. We spent a bunch of summers working on it. We would meet at Craig Street Coffee. Sometimes we’d meet in our offices. I inputted the graphs and  the statistics. Just the volume made it a lot of work, but it’s not rocket science. Karen is much more the hardcore historian.”

Clay added, “I did more of the data coding, and Dan did more of the empirical and theory stuff, but both of us did a lot of both. We’re similar enough but different.”

“We also learned during the process that other academics were doing a lot of work on the concept of persistence,” Berkowitz said.

“There was already a literature,” Clay said, “but we are one of the pieces in the development of the literature. I think the American experience is important in a lot of contexts. In other countries, you’ve got different languages, cultures, different occupations, politics, but in the U.S. you have some [stability] over time. That’s why we refer to it as an evolution, because that’s descriptive of what’s going on here.”

“The other advantage of the United States,” Berkowitz added, “is that you have these very rich datasets. When people are writing about the persistence of European colonialism from 300, 400, 500 years ago, you’re basically looking at data from that time and some contemporary data, but you’re lucky if you have evidence midway. Here you have enough data — census data, for example — every 10 or 20 years.”

—Peter Hart


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