Policy Seminar with Terry Anderson and Dominic Parker

Tuesday, May 10, 2016
Annenberg Conference Room, Lou Henry Hoover Building

Terry Anderson, Dominic Parker, David Brady, Darrell Duffie, Monica Lane Guenther, Bob Hall, Rick Hanushek, Preeti Hehmeyer, Dan Kessler, Stephen Langlois, Ed Lazear, Andre Le Dressay, Lora Parker, Charles Plosser, Greg Rosston, John Taylor, Yevgeniy Teryoshin

Terry Anderson, Senior Fellow at the Hoover Institution and the executive director of PERC, and Dominic Parker, Assistant Professor in the Department of Agricultural Economics & Applied Economics at the University of Wisconsin, discussed their work on “Unlocking the Wealth of Indian Nations.”

Terry Anderson opened the talk by describing Indian reservations as “islands of poverty in a sea of prosperity” with per capita income half the national rate, significantly higher unemployment rates, and lower labor participation rates than U.S. citizens. He then summarized the broad theories for the poverty on Indian reservations. It has been proposed that they inherited a culture of sharing and lack of individual ownership. They also face a lack of natural resources. Anderson focuses on ineffective institutions as the major source of poverty. A combination of government oversight and regulation over land in trust and fractioned land tracts with land parcels owned by multiple individuals that all hold veto power over proposals (allotted trust) make development costly. These factors contribute to land in trust being less productive than individually owned land parcels.

Dominic Parker continued the discussion by estimating the effects of land tenure on development in a case study for Ft. Berthold. Since the 2000’s the reservation has seen a large development of horizontal oil wells but require a contract with each owner below whose land the well reaches. Exploiting differences in land parcels, Parker finds that tenure heterogeneity among neighbors causes delays in development.

They continue with a discussion of tribal sovereignty and whether the paternalistic approach of the U.S. government is contributing to poverty. Using the 1934 Indian Reorganization Act and the voting patterns of the reservations, they use a regression discontinuity estimation design to show that government oversight lowers the level and the spread of income growth rates. They end on the note that unlocking the wealth of Indian nations requires that they be granted sovereignty, develop institutions, and face the risks that will accompany self-determination and growth potential. 

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