Measuring Benefits from Energy Transitions

Consumer Surplus from Energy Transitions 

by Roger Fouquet (Grantham Research Institute on Climate Change and the Environment at LSE)

Abstract: Energy transitions have led to major advances in human wellbeing. However, little evidence exists about the scale of the net benefits. By developing a new method for identifying the demand curve, and by using a unique, historical data set, this paper estimates the consumer surplus associated with heating, transport and lighting over more than two hundred years and identifies the gains from a number of key energy transitions. For certain energy transitions, the increase was dramatic, reflecting the transformations in society and lifestyles that mobility and illumination provided in the nineteenth and twentieth centuries. Yet, the net benefits related to heating technologies only rose modestly. Finally, due to saturation effects of the demand for energy services, future technological developments and energy transitions may benefit consumers (though not necessarily society as a whole) less than those in the past.


Circulated by NEP-HIS on 2017‒10‒22

Review by: Cristián Ducoing (Lund University)


Energy Transition


The current research focus in energy transitions is mainly motivated by the environmental implications of energy consumption. This more than justified direction has relegated to a second place the analysis of the enormous benefits derived from energy transitions, specially when we observe consumers’ welfare.  This new paper by Roger Fouquet analyses the positive impacts of energy transitions (hereafter, ET) by looking into how each ET generates consumer surplus.


Roger Fouquet

This paper combines data sets from two previous works of the author about the United Kingdom on service prices between 1300 and 2010 (Fouquet 2011a), and service consumption between 1700 and 2010 (Fouquet 2014). The data sources and methodologies used were explained in Fouquet (2008). In brief, Fouquet has done an upgrade of his former estimations to measure how much welfare we have obtained by ET. The author follows a standard measure of welfare (how less consumers pay for a specific service) and he applies it to each ET during the last two centuries in the United Kingdom.


Figure 1: Income Price Elasticity of Demand for Energy Services in the United Kingdom, 1800 – 2008

As shown in the examples in Figure 1, a key advantage of focusing on energy services, rather than on fuels (energy carriers), is that the demand for services remains comparable with the introduction of new goods and technologies. 


Figure 2: Consumer Expenditure on Domestic Heating, Passenger Transport and Lighting as a share of GDP in the United Kingdom, 1800 – 2010

The conclusions extracted from the paper could be summarized as follows:

  1. Attempts to estimate consumer surplus face enormous challenges, mainly by the effects of disruptive technologies. However, it could be possible to get an approximation taking into account the methodology used by Nordhaus (1997). Moreover, the paper presents a novel method that allows to identify the changes in demand curves for energy services (lightning, heating and transport).
  2. There were dramatic increases in consumer surplus due to energy transition in transport (stagecoaches to railways) and lightning (candles to gaslight and to electric lightning).
  3. Developing countries are benefited by increasing energy consumption. On the other hand, benefits in developed countries could be lower than in the past.
  4. The method offered allow us to forecast the long-run net benefits of new energy technologies and transitions. This issue has enormous policy implications in relation with the environmental challenges that we are facing us.


Currently, to defend energy systems/consumption as mechanisms of progress and development is quite complicated, specially if the energy systems contain fossil fuels, such as the main energy carriers in the case of the United Kingdom. This paper focuses its attention on the “good side” of energy consumption and mechanization, tackling a compulsory debate on the trade-off between economic development and sustainability. Roger Fouquet has mentioned this debate in an 2016 article, where he analyzed the lessons from history to our current energy transition. Now, Fouquet has demonstrated, accounting for the consumer surplus, than previous energy transitions have been beneficial for consumers/population. The question is: how should the current and  future energy transition be carried? In order to achieve economic development, countries pursuing higher income levels require an increase in energy consumption.  Fossil fuels still are a valid option to increase energy consumption; a low carbon economy could be farther in the road than we thought. A challenge to global society is to create an economic environment favorable to clean energy technologies, in order to promote economic growth in low income regions without the deprivation of our natural resources and environment.    

As this paper has shown us, there are periods when the increase in energy consumption has been beneficial to aggregate welfare, at least from a country/region perspective. However, the current global situation doesn’t allow an increase in energy consumption based in fossil fuels without risking main environmental equilibriums.

The only possible criticism to the paper is the implicit “normative” scope supported by one country experience. Nevertheless, Fouquet presented this paper as a starting point for further research.


Fouquet, R. (2011a) “Divergences in Long Run Trends in the Prices of Energy and Energy Services.” Review of Environmental Economics and Policy 5(2) 196-218.

Fouquet, R. (2014) “Long Run Demand for Energy Services: Income and Price Elasticities over 200 Years.” Review of Environmental Economics and Policy 8(2) 186-207.

Fouquet, R. (2008) Heat Power and Light: Revolutions in Energy Services. Cheltenham: Edward Elgar.


The Professional Historian in the Era of Globalization

Who is Lying on the Procrustean Bed?: Current Historians of the World, Denationalize Ourselves!

By: Naoki Odanaka (Tohoku University)

Abstract: This paper aims to analyze and evaluate the arguments presented in the Writing the Nation series (hereinafter WtN), targeting particularly its Vol. 2 entitled Setting the Standard (hereinafter StS). In a globalized world, do we historians still need to talk about national history, that is, the practice of writing the history of nations or should we not instead seek to produce historical works suitable for the globalized world, including global histories?


Distributed by NEP-HIS on 2017-04-09

Review by: Stefano Tijerina (University of Maine)

Naoki Odanaka argues that the present era of globalization demands that the historian abandons its state-centered focus and instead begins to construct history from a global perspective in order to use history as an instrument to understand how we reached the current political, economic, political, and cultural dynamics. His argument departs from the conclusions of the Writing the Nation series, and more particular volume 2 of that series, where a consensus among almost 100 historians was reached that a refocus of the study of history was necessary in order to adapt to current realities.[1] Odanaka asks whether the current focus on “national history” is relevant or if historians should instead “produce historical works suitable for the globalized world;” in other words, should they instead engage in the production of global histories? [2] Odanaka does not discard the relevance of national history but instead suggests we move toward a global analytical approach that connects and provides a more holistic understanding of developments such as free trade, multilateralism, the emergence of trading blocks, geopolitical transformations, movements of people and commodities, and technology.

National histories, suggests Odanaka, continue to serve their purpose of nation building.[3] They are important tools for the construction of national identity; they “legitimize the existence” of the nation-state.[4] From his perspective, there is no denial that the nation-state continues to be relevant, and in some regions the concept “has grown stronger,” but globalization has inevitably impacted the political, economic, social, cultural, and environmental development of each nation.[5] The dynamics of globalization have “destabilized” the lives of private, public and social actors, forcing them to “cling” to their national identities as they become challenged by the flow of goods, ideas and people, and it has been the role of the traditional historian to keep the construct of the nation-state alive in spite of the changing dynamics.[6] Odanaka highlights the flow of immigrants from the Middle East to Europe and the impact that this has had on the nation-state narrative, forcing the co-existence between the global and the national interpretations of history.[7]

The author’s Euro-centric focus impedes him from moving beyond the North-South dynamics of globalization. A more holistic analysis of South-South and North-North dynamics would have strengthened his argument, since the legitimization of the nation-state is challenged by transformative historical realities within the global North and the global South as in the case of Venezuelan-Colombian relations or British and European Union relations that may only be explained through transnational global history.

Naoki Odanaka does agree that current realities may not be explained through the cohesively confined borders of the nation-state, because doing so leads to “methodological nationalism.”[8] There is no exclusivity anymore; borders have become very porous and in some instance they have completely disappeared as in the case of commercial trade under the North American Free Trade Agreement (NAFTA) or as in the case of global human and narcotics trafficking.

Therefore, says Odanaka, historians need to center their research strategy on “other frameworks of historical research.”[9] He suggests new approaches such as non-spatial focuses or “non-national spatial identities.”[10] His critical views of the nation-state approach impede him however from considering other spatial dimensions of historical analysis that, although relying on the nation-state, only incorporate the nation-state as one of many transnational actors within the more holistic analysis. For example the labor history of oil that forces the historian to see not only labor as a transnational issue, but corporations, management culture, institutional frameworks, technology, commercialization, transportation, marketing, and consumption as well.

Noaki Odanaka concludes by saying that the professionalization of the historian depends on the traditional notion of the nation-state as the central focus of historical narrative. There is a notion that there cannot be a historian without the nation-state, thus the state-centered focus of the local and international institutions that promote and justify the profession and science of history. From the beginning, the methodology became state-centered, thus his argument about the prevalence of “methodological nationalism” and the need to change this culture from within the profession.[11] Odanaka therefore suggests that a shift away from nation-state dependency demands institutional changes as well as a revision of the science’s methodology.

History may no longer be used as an instrument for the justification and preservation of the nation-state. Odanaka would agree that global and transnational approaches to the study of history may serve as an instrument to help societies look at themselves in the mirror, leading them to question traditional views by breaking the barriers of imaginary borderlands that currently impede the public from seeing the historical interconnectivity that has always existed between humans, commodities, ideas, cultures, and physical environments. History may serve as an instrument to break down the status quo, debunking the sovereignty of the nation-state, a reality that is already visible under the new dynamics of globalization. This might mean that historians may cease to exist as agents of the nation-state and instead serve as agents of humanity.[12]

Odanaka recommends that professional historians self-reflect on their responsibility to humanity.[13] This is challenging, particularly for historians in the Global North who are writing and researching from a position of privilege as well as for those historians in the Global South clinging to fragile institutional and nation-state structures that are quickly being dismantled by the market forces of globalization. Odanaka reminds historians to reflect on the current political, economic, social, cultural, technological, and environmental realities in which they are living.[14] He reminds historians that their job is to connect the past with the present in order to decipher and explain contemporary realities, constantly aware of identity and spatial constructs that limit our scope as researchers.[15]

[1] For more information see volume 2 Setting the Standard; Ilaria Porciani and Jo Tollebeek, eds., “Setting the Standard,” in Writing the Nation series, ed. Stefan Berger, Christoph Conrad, and Guy Marchal (Basingstoke: Pelgrave Macmillan, 2012)

[2] Naoki Odanaka, “Who is Lying on the Procrustean Bed?: Current Historians of the World, Denationalize Ourselves!” (paper, review forum for the Writing the Nation Series, Sogan University, Seoul, Korea, April 22, 2016), 1.

[3] Ibid., 1.

[4] Ibid.

[5] Ibid., 2.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid., 5.

[12] Odanaka points out the case of local historians in France and Germany as well as Japanese historians that went against the status quo in order to illustrate alternatives to traditional nationalist approaches to history. Ibid., 5-6.

[13] Ibid., 8.

[14] Ibid.

[15] Ibid., 9.

Black Living Standards in South Africa before Democracy

Black Living Standards in South Africa before Democracy: New Evidence From Heights

By: Bokang Mpeta (Stellenbosch University), Johan Fourie (Stellenbosch University) and Kris Inwood (University of Guelph)

Abstract: Very little income or wage data was systematically recorded on the living standards of South Africa’s black majority during much of the twentieth century. This paper uses four data sets to document, for the first time, an alternative measure of living standards: the stature of black South Africans over the course of the twentieth century. We find evidence to suggest that the first three decades of the century were particularly bad, perhaps due to the increasingly repressive labour policies in urban areas and famine and land expropriation that weighted especially heavily on the Basotho. The decade following South Africa’s departure from the gold standard, a higher international gold price and the demand for manufactured goods from South Africa due to the Second World War seem to have benefited both black and white South Africans. The data also allow us to disaggregate by ethnicity within the black population group, revealing levels of inequality within race group that has been neglected in the literature. Finally, we compare black and white living standards, revealing the large and widening levels of inequality that characterised twentieth-century South Africa.


Distributed by NEP-HIS on: 2017-10-15

Review by: Gregori Galofré-Vilà (University of Bocconi and University of Oxford)

Almost forty years ago, a group of historians led by Robert Fogel began to explore the potential of anthropometric measurements for answering a range of historical questions, largely, but not limited to, those concerning health and wellbeing (Fogel et al. 1978). Although around 80% of the main variation in individual height may be genetic, it has long been recognised that variations in the mean heights of different groups of people owe much to economic, social, and environmental circumstances.

Since the early efforts of Robert Fogel, anthropometric data contributed to long-standing debates such as the health of slaves in the US South (Steckel 1977) and the living standards during the British Industrial Revolution (Floud et al. 1990). Meanwhile many historians began to explore the development of height in many countries. For instance, Komlos (1985) began the collection of data for the Habsburg Empire, Martínez-Carrión (1986) for Spain and Sandberg and Steckel (1987) for Sweden, just to name a few. For a recent review of the height literature see Galofré-Vilà (2018).

Perhaps, the most interesting discovery until now, as commented by Floud et al. in The Changing Body (2011) and Deaton in The Great Escape (2016), is that since the 1850s, or over the course of some 6-7 generations, heights in Europe and North America have progressed into previously uncharted territories. For instance, Dutch men, being today the tallest in the world, grew from 166.5 to 182.7 (or 1.2 cm per decade). Better diets, sanitary reforms, lower frequency of sickness and shorter workdays are also reflected in terms of longevity, and during the same period Dutch life expectancy grew from 36.6 to 77.8 (or 2.8 years per decade).

However, in less wealthy parts of the world these improvements have been less important –if we can talk in terms of improvements at all. For instance, Guntupalli (2007) showed that Indian heights increased from 163.2 cm to 165.1 cm between the 1910s and 1980s (or 0.3 cm per decade) and Moradi et al. (2013) found that heights in Ashanti (Ghana) increased from 167.7 cm to 168.8 cm (or 0.6 cm per decade). Indeed, today life expectancy in developing countries is clearly below Western standards (in 2014 life expectancy in India was 68 years and 61 in Ghana).

In a very interesting paper, Bokang Mpeta, Johan Fourie and Kris Inwood (2017) take advantage of height records to chart, for the first time, the living standards of black South Africans between the 1890s and the 1990s. They addressed three questions: (1) Were poor black living standards a result of apartheid-era polices, or did they worsen even before South Africa’s most infamous era? (2) When did white and black living standards diverge? and (3) Can we explain the level and trend within the black population over the twentieth century? As the authors point out, the height data here are especially helpful as data on more conventional or modern indicators are lacking.

Similar to the less wealthy parts of the world, they found that the height of black South Africans improved little across the twentieth century (1.3 cm between 1895 and 1985 or 0.1 cm per decade). Indeed, as Figure 1 shows, they discovered that between the 1890s and 1910s heights declined from nearly 168 cm to 167 cm and linked this decline to the white repression and regulations of land expropriation (for instance, the 1913 Native Land Act was particularly painful as it banned the ownership of land by the black population). They also stressed some negative effects of extractive institutions following the discovery of diamonds in Kimberly in 1867 and gold mines in Johannesburg in 1886.

Figure 1: Height development of black South Africans between 1895 and 1990. Source: Mpeta, Fourie, Inwood (2017).

Yet, it seems that a reversal occurred when South Africa left the Gold Standard (in December 1932) and, due to the increases in the international price of gold, the prospects of employment for black people rapidly improved, with heights increasing from 167 cm to 168 cm during the 1930s and 1940s. Feinstein (2005) also observed that the Second World War created a powerful stimulus to local industries and gold mining, creating opportunities for many to sell goods abroad. However, this short-lived period of improvement somewhat slowed down after the 1950s, reaching 168.5 cm in the 1970s and followed the electoral victory of the National Party in 1948. The apartheid and new institutional reforms such as the 1959 Promotion of Black Self-Government Act (which among other things abolished parliamentary representation for Blacks) seem also to have worsened black living standards.

There are also additional interesting features of the paper. Black males born towards the end of apartheid were nearly 7 cm shorter than white males. However, this might not be surprising because, as the authors explain, infant mortality in the Cape Colony was two times higher for black Africans and the wages paid to white miners were almost eight times higher than those paid to black miners. They also find differences in height by nearly 2 cm between black ethnicities.

As seen in Figure 1 above, in order to have sufficient data to cover a century, the authors use four separate sets of data. First, the heights of men who joined the South African Army between 1940 and 1945 (and born between 1890 and 1922). Second, the heights derived from dead bodies deposited in regional hospitals of South Africa that were unclaimed (with birth years estimated between 1897 and 1980). Finally, the height data compiled in two modern health surveys: the 1998 South African Demographic and Health Survey (DHS) and the 2008 National Income Dynamics Study (NIDS). As the authors point out at different points in the paper, all these sources potentially carry different issues of selection and representativeness. For instance, there is almost no information on who these 500 dead men were and whose bodies were unclaimed. Indeed, this is a rather limited dataset with, on average, 6 men for each birth year. Meanwhile, medical surveys such as the DHS are based on men who were in a household at the time of the interview and married to a woman aged 15-49 (with single men neglected from the survey). Indeed, the differences between these two overlapping surveys after 1960 are rather curious.

The first sample, the military one, is perhaps the most controversial in light of recent papers from Bodenhorn, Guinnane and Mroz (2017) about sample selection bias. In a nutshell, these authors highlight the idea that height records coming from voluntary armies can be a biased sample of the underlying population because varying conditions of the economy and trade brought forward, at different times, recruits from different social classes. Mpeta, Fourie and Inwood (2017) seem rather confident that sample selection is not a concern here because heights and wages moved together and unemployment was rather low in the 1940s. Yet, Bodenhorn et al.’s argument requires the data to have been derived from men who were recruited over a relatively long period of time and Mpeta et al.’s black time-trends between 1895 and 1920 are derived from a shorter period of recruitment (1940-1945). Here, it would be interesting to know more about differences in economic conditions within that short-period of rapid economic growth and social change.

Indeed, the decline in black living standards seen between 1895 and 1920 is not universally accepted. For instance, in Why Nations Fail, Acemoglu and Robinson (2012) observe that “the development of the mining economy and the expansion of European settlement had other implications for the development of the area. Most notably, they generated demand for food and other agricultural products and created new economic opportunities for native Africans both in agriculture and trade”; at least, as the authors explain, until 1913 with the Native Land Act. The decline in stature found between the 1890s and 1910s might also be explained by the composition of age in the sample. Whenever we seek to derive time-trends from samples of army recruits who were recruited over relatively short periods of time, the time-trends appear to show a decline. This raises a question about the extent to which men who join the army at older ages are as representative of their birth cohorts as men who join at younger ages.
Despite these and other comments, and the limitation of data to pursue further econometric analysis, for now, we should be really grateful to the authors for charting a new African country in the height literature and for providing new material to ponder.


I thank María Gómez-León and Bernard Harris for valuable comments on a first draft of the column.

List of references

Acemoglu, D., J. Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business.

Bodenhorn, H., T. W. Guinnane, and T. A. Mroz, “Sample-Selection Biases and the Industrialization Puzzle,” Journal of Economic History, 77(1), 171-207.

Deaton, A. 2013. The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton University Press.

Feinstein, C.H. 2005. An Economic History of South Africa. Conquest, Discrimination and Development. Cambridge University Press.

Floud, R., K. W. Wachter, and A. Gregory. 1990. Height, Health and History: Nutritional Status in the United Kingdom, 1750-1980 (Cambridge University Press).

Floud, R., R. W. Fogel, B. Harris, and S. C. Hong. 2011. The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700. Cambridge University Press.

Fogel, R. W., S. Engerman, J. Trussell, R. Floud, and C. L. Pope. 1978. “The Economics of Mortality in North America, 1650-1910: A Description of a Research Project,” Historical Methods 11:2, 75-108.

Galofré-Vilà, G. 2018. “Growth and Maturity: A Quantitative Systematic Review and Network Analysis in Anthropometric History,” Economics and Human Biology 28, 107-118.

Guntupalli, A. M. 2007, Anthropometric Evidence of Indian Welfare and Inequality in the 20th century, Doctoral diss., Tübingen University.

Komlos, J. 1985. “Stature and Nutrition in the Habsburg Monarchy: The Standard of Living and Economic Development in the Eighteenth century,” The American Historical Review 90:5, 1149-1161.

Martínez-Carrión, J. M. 1986. “Estatura, nutrición y nivel de vida en Murcia, 1860-1930,” Revista de Historia Económica – Journal of Iberian and Latin American Economic History 4:1, 67-97.

Moradi, A., Austin, G., Baten, J. 2013. “Heights and Development in a Cash‐Crop Colony: Living Standards in Ghana, 1870‐1980,” unpublished manuscript.

Mpeta, B., Fourie, J., and Inwood, K. 2017. “Black Living Standards in South Africa before Democracy: New Evidence from Heights,” Stellenbosch Economic Working Papers 10/2017.

Sandberg, L. G., and R. H. Steckel. 1987. “Heights and Economic History: the Swedish case,” Annals of Human Biology 14:2, 101-110.

Steckel, R. H. 1977. The Economics of U.S. Slave and Southern White Fertility. Doctoral diss., University of Chicago.

Entrepreneurs and Indian Transnational Business

Transnational Indian Business in the Twentieth Century

By: Chinmay Tumbe (Indian Institute of Management Ahmedabad, India)

Abstract: This article argues that migration and investment from India moved in tandem to chart the evolution of transnational Indian business in the twentieth century, first toward Southeast Asia and Africa and later toward the United States, Europe, and West Asia. With a focus on the banking and diamond sectors, the overseas investment project of the Aditya Birla Group, and the transnational linkages of India’s one hundred richest business leaders, the article locates important events, policies, and actors before economic liberalization in 1991 that laid the foundation for subsequent globalization of Indian firms.

Business History Review (Forthcoming – Published online: 12 December 2017)

Review by Niall G MacKenzie (Strathclyde Business School)

Chinmay Tumbe’s article in Business History Review, ‘Transnational Indian Business
in the Twentieth Century’ is, as the title suggests, an exploration of Indian business history at home and abroad throughout the twentieth century. The article is well-written with a number of themes present throughout which go beyond simple transnational analyses, encompassing elements of kith (networks) and kin (family) in the development of Indian business over the period set against changing migration patterns within and outwith, the Indian sub-continent. A further clear theme throughout the paper is the changing role and concomitant impact of the institutional frameworks in which Indian business acted under, both in domestic and international terms. It is on these areas that this review takes its focus.

The paper compares and contrasts twentieth century Indian migration trajectories and their impact on Indian international business connections, with a particular focus on the activities of the banking and diamond industries, as well as highlighting a number of famous Indian firms and entrepreneurs including the Godrej, Birla, and Tata families, Lakshmi Mittal, and the top 100 richest Indians using a mixture of archive data, corporate histories, biographies, and secondary materials such as magazines and newspapers. In this sense, the paper is a non-traditional business history piece that combines a variety of methodological approaches to paint a picture of Indian transnational business history over the twentieth century that distinguishes itself with its attention to rigour, a clear story arc, and the creation of a historical framework for future studies. As one may expect from Business History Review, the writing is tight, the subject matter broad but detailed in its analysis, and a number of valuable insights into how Indian business developed over the period emerge as a result.

Tumbe’s work covers both Indian domestic business activities and overseas investment activities by Indian companies over the twentieth century, offering readers an interesting and illuminating analysis of these subjects which reflect a growing interest in Indian business within business history more generally, including a special issue in Business History edited by Carlo Morelli and Swapnesh Masrani on Indian Business in the Global World, publication of the Oxford History of Indian Business by Dwijendra Tripathi (2014), the developing economies initiative at Harvard Business School which focuses on (amongst other developing countries) Indian business, a 2015 conference on Indian and South East Asian business history hosted by Harvard Business School bringing together scholars from all over the world, and a number of articles published in each of the major business, economic, and accounting history journals. In this sense Tumbe’s paper is a continuation of the growing interest in Indian business history around the world and recognition that much of the history of the country has been written from the perspective of the west, and in particular Anglo-Indian viewpoints.

Work written from the perspective of indigenous Indian scholars therefore has the potential to provide counterpoints, deeper insights, and more interesting considerations of phenomena and change that are oftentimes taken for granted by Western scholars. Indeed, much theory that has been produced in business and management has been done so within Western developed countries and typically by Western scholars. This is a point that has been raised in the Family Business Review journal by its outgoing editor Pramodita Sharma (with family business stalwarts Jim Chrisman and Kelin Gersick), who in a 2012 editorial called for more testing of existing theory, and creation of new theories by looking at ‘different institutional contexts’ as ways of doing this. This is a call that applies beyond family business however and into business and management more generally – cognizance of context and its multiple forms and applications to existing and new knowledge is something that historians are perhaps naturally familiar with and indeed drawn to, but which has value beyond history also.

Arguably the most interesting aspect of the paper (to this author at least) was the focus on the role that Indian family businesses played within the constantly evolving Indian and global institutional contexts over time, engaging domestic and international business networks and deploying their capital in different ways to address their aims and aspirations. The case of AV Birla going to study at MIT is one such example – scions of large family businesses nowadays are regularly packed off to global top institutions to gain a world class education and expose them to more of the world in preparation for taking the helm of the family business. However, according to Tumbe, in the mid-1960s India was a relatively insular looking country and business environment which suggests Birla’s decision to study at MIT was one that was more than just expanding personal horizons but was in fact, at the time, a relatively novel way of preparing Birla and the helping firm’s international expansion aspirations. Birla was then an early example of what is now a relatively standard practice in terms of preparing for the future leaders within the family business, but also of preparing the business itself by accessing and leveraging the networks that come with enrolment in top global education institutions for higher education.

One of the principal questions posted in the paper was “How and why did Indian business operations extend beyond the boundaries of the subcontinent, and was migration a relevant factor in this process?” The short answer that Tumbe’s paper provides, is that migration was a relevant factor in the process (as one might reasonably expect), but also that Indian business operations did exist beyond the boundaries of the subcontinent and the reasons for doing so were varied. In some cases, Indian businesses were accessing existing networks of Indian diaspora for soft landings abroad, in others they were seeking to expand operations due to the constrictions that were imposed on them by an FDI-hostile Indian government that resulted in domestic industrial stagnation and a strong push factor to invest abroad, requiring Indian businesses to look outwards for international expansion and growth opportunities. Kith and kin were therefore important features of such expansion with the desire to mitigate the agential risk that naturally comes with the creation of distance between operations and control as far as possible. Consistent within this is the recognition that friends and family are important in business expansion and development; Tumbe provides a demonstrable example of this in his analysis of Birla’s expansion into Antwerp and the role Vijay Mehta, a cousin of AV Birla’s best friend based in Antwerp and Bangkok, played in Birla’s first overseas investment.

Tumbe’s article is ultimately a broad sweep analysis of Indian transnational business activities and development over the twentieth century that illustrates the changing nature of business in India, the shifting institutional context, and the opportunities and constrictions that come with doing business in a developing country. Its relevance and interest to business and economic historians is clear in its historical analysis and content, but its wider applicability to understanding contemporary business and management phenomena such as resource orchestration, transnational business, and family business is also apparent. For those familiar with Indian business history it will likely confirm a number of existing thoughts and concepts, but for those who are not as familiar it provides an enjoyable and informative overview of how Indian business changed over the course of the twenties century with an array of source material that is handled well and written in an engaging fashion.

Illusions of Control

Democracy by Mistake

Daniel Treisman (UCLA)

Abstract: How does democracy emerge from authoritarian rule? Influential theories contend that incumbents deliberately choose to share or surrender power. They do so to prevent revolution, motivate citizens to fight wars, incentivize governments to provide public goods, outbid elite rivals, or limit factional violence. Examining the history of all democratizations since 1800, I show that such deliberate choice arguments may help explain up to one third of cases. In about two thirds, democratization occurred not because incumbent elites chose it but because, in trying to prevent it, they made mistakes that weakened their hold on power. Common mistakes include: calling elections or starting military conflicts, only to lose them; ignoring popular unrest and being overthrown; initiating limited reforms that get out of hand; and selecting a covert democrat as leader. These mistakes reflect well-known cognitive biases such as overconfidence and the illusion of control.


Circulated by NEP-HIS on: 2017-11-05

Revised by Thales Zamberlan Pereira

In his paper “Democracy by Mistake,” Daniel Treisman attempts to provide a new answer to the important question of how democracy emerges from authoritarian rule. Different from previous theories, which attribute the fall of non-democratic regimes to calculated decisions by those in power, Treisman argues that most episodes of democratization happened because dictators – like everyone else – are in fact bad at probabilities. Like all humans, but especially so given their circumstances, dictators are prone to overconfidence and the illusion of control. Living the life of confirmation bias, therefore, non-democratic regimes start to lose their grip on power making avoidable mistakes. Mistakes, of course, are only truly avoidable in hindsight, but the strength in Treisman’s paper relies on his argument that two thirds of his recorded cases of democratization do not fit the usual interpretation that dictators deliberately choose to share or surrender power when democracies start to emerge.

Chile after pinochet

Chile after Pinochet – Source:

In the democratization by choice category, Treisman presents six common arguments from the literature and divides them into three schools of thought – democracy by bargain, splits within ruling circles, and democracy as a peace-making device. The general argument, nonetheless, is that intentional democratization happens when the ruler weights his probabilities and concludes that if he does not reduce his personal power in the short run, he will have worse problems in the long run – e.g., the dictator will have no money to fight wars or will have people with torches at his front door.

In the democratization by “bad choice” category, the mistakes that lead to democratization are, in a simplified way, the following: ignoring warnings and getting overthrown by popular revolt; calling a referendum or election— and losing; initiating or entering a military conflict—  and losing; enacting partial reforms to stabilize the regime— but undermining it; selecting a leader to preserve the regime— who destroys it; and using repression counterproductively.

To divide cases of democratization between intentional and non-intentional, Treisman analyses 218 episodes since 1800 using two definitions of democracy. The first one is a binary concept, called “qualitative,” which uses data from Boix, Miller, and Rosato (2013).  In their definition, democracy exists in a country when elections are free and competitive, the head of government is either directly elected or answerable to an elected parliament, and at least half the male population has the right to vote. The second definition of democratization is called “directional”, and it uses the Polity IV database, which measures countries regimes on a 21-point scale – from -10 for hereditary monarchies to +10 in the case of consolidated democracies. For a country to be considered a democracy, the Polity IV establishes that it must have a score of at least 6.


Some people just can’t let it go

With these categories, how can we interpret the empirical results of the paper? Is it the case that most episodes of democratization happened because dictators, overconfident in their position, made critical mistakes that ultimately undermined their power? The answer, it seems, depends a lot on what the author considers as a mistake. For example, among the episodes of intentional democratization, the end of the military dictatorship in Brazil in 1985 is categorized as a “great compromise.” I agree that this is a good example of intentional democratization due to political compromise, however, one could argue the opposite using the framework presented in the paper. It is known in Brazilian political history that the last military president in Brazil did not begin his term planning to be the last. In fact, his indecision in choosing/supporting a successor led to the strengthening of civil groups demanding increased access to the government (Dimenstein 1985). Therefore, the democratization of Brazil after 1985 also started with a dictator who was overconfident he could maintain the status quo (and who also overestimated his own relative competence). However, is this sufficient to defend the hypothesis that democracy was the outcome of individual mistakes? What about the institutional environment that allowed such significant transformations to happen? It seems that “critical mistakes that undermine power” cannot be restricted to the cognitive biases of “great men.” The fact that democratic reforms are not intentional does not necessarily lead us to the “democracy by mistake” camp.

Another issue of using multiple categories is that sometimes it is not clear which examples are really being used as a mistake. Take the “initiating or entering a military conflict – and losing” category, which account for 6-9 percent of democratization processes, according to the paper. Among the examples is the well-known miscalculated attack by the Argentine military government on the Falkland Islands in 1982. However, Treisman also uses as an example for this category Paraguay’s attack on Brazil in 1864, which started the War of the Triple Alliance. It is strange that these two episodes are bundled together because the death of Solano López (the Paraguayan dictator) was not followed by a democratic government. In fact, the data that Treisman uses also don’t assign this period to a democratic transition: Polity IV only assigns democracy to Paraguay in 1994, and Boix et al. data indicates that Paraguay became democratic in 2003. Moreover, one must not forget that Solano attacked Brazilian officials right after Brazil deposed his allies in Uruguay and potentially ended his access to important continental rivers and the sea. This could be considered a critical mistake, but I couldn’t understand if the author is considering any mistake that weakens authoritarian rule as a valid example, or if his examples are only for when the mistakes turn into a democracy. Does Solano’s choice count as a “leap in the dark” to democracy or not?


Policy IV authority trend for Brazil (with comments)

Treisman asserts that intentionalist theories find weak support in historical cases, but using behavioral science as a mechanism to explain democratic transitions seems insufficient to explain transformations that usually are larger than individuals. Treisman makes arguments such as: “neurological evidence suggests power can impair the ability to process the actions and emotions of others” (p. 28), and “physical and mental deterioration affect[ing] leaders in all systems, they are more likely to impair decision making in autocracies.” (p. 29). Nonetheless, it is surprising that even today dictatorships seem stable in the eyes of those outside it – until the day they are no more. Angola and Zimbabwe are recent examples of this. It seems that there is always the illusion of control, even if dictators stay in power. Isn’t it the case that our mistakes inevitably turn into naive memories that, if not for one detail, make us think that everything could have been different?


Boix, Carles, Michael Miller, and Sebastian Rosato. (2013) “A Complete Data Set of Political Regimes, 1800–2007,” Comparative Political Studies, 46 (12), pp. 1523–1554.

Dimenstein, Gilberto. O Complô que elegeu Tancredo (1985). Rio de Janeiro: Editora JB.

Spatially-Embedded Collective Memory and Political Behaviors

Activated History – The Case of the Turkish Sieges of Vienna

Christian Ochsner and Felix Roesel (Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Dresden Branch)

Abstract: We study whether long-gone but activated history can shape social attitudes and behavior even after centuries. We exploit the case of the sieges of Vienna in 1529 and 1683, when Turkish troops pillaged individual municipalities across East Austria. In 2005, Austrian right-wing populists started to campaign against Turks and Muslims and explicitly referred to the Turkish sieges. We show that right-wing voting increased in once pillaged municipalities compared to non-pillaged municipalities after the campaigns were launched, but not before. The effects are substantial: Around one out of ten votes for the far-right in a once pillaged municipality is caused by salient history. We conclude that campaigns can act as tipping points and catalyze history in a nonlinear fashion.


Circulated by NEP-HIS on: 2017-11-05

Revised by Martin Söderhäll (Uppsala University)


The Turkish Siege of Vienna (1529). Collection: Vienna Museum. Source: Wikimedia Commons.

a) Summary

Is it possible for “arguably irrelevant” historical events to shape the voting behavior of a population if triggered by political campaigning exploiting said historical events? This is the main question the authors set out to answer in the paper. The authors show that political campaigning that uses stereotypes of religious and ethnic minorities can be highly effective when encountering spatially embedded collective memory utilizing a set of seemingly unique historical and societal circumstances occurring in present day Austria, among other things: 1. The pillaging of Austrian villages by Turkish troops during the Ottoman military expeditions in the 16th and 17th centuries. 2. The presence of one of Europe’s oldest and still existing right-wing populist parties (the Freigeitliche Partei Österreich, FPÖ) which in 2005 started to campaign against Muslims and Turks explicitly referring to “their vicious crimes during the Turkish sieges of Vienna” and 3. The arguably exogenous location of the Battle of Bisamberg which led to spatial discontinuity in the probability of villages being pillaged by the Turks north of the Danube during the second siege of Vienna in 1683.


The empirical strategy is directed towards examining if the vote share of the Austrian right-wing populist party (FPÖ) was significantly higher in villages exposed to Turkish pillaging in the 16th and/or the 17th centuries (i.e. in villages were the collective memory of Turkish pillages was stronger) than in villages that were not pillaged, right after the change in campaign tactics of the FPÖ in the year 2005. Using the “tools of the trade” of 21st century economic historical research (the baseline model uses a traditional DiD approach, although the spatial fuzzy RD design using panel data, seen in section 4.3 is new according to the authors), Ochsner and Roesel find that having been exposed to pillaging in the 16th and the 17th centuries led to an activation effect (i.e. the average treatment effect) of 1.6-3.05 percent depending on the specification. The larger effect sizes, 2.5-3.05 percent are estimated using the spatial fuzzy RD design on the sub sample of villages west of Vienna.


The authors conclude that neither “a local historical record of foreign atrocities” or “a campaign that addresses the stereotypes of these foreigners” are necessary and sufficient conditions to activate any effect. However, when both conditions are met the effect is statistically significant and robust across a range of specifications. In section 7 of the paper the authors address the underlying mechanisms at work. Ochsner and Roesel find that the effects of the campaigning were stronger in small rural communities and in communities with a lower share of out-commuters. Their findings suggest that “collective memory is likely to be a function of local embeddedness”. The authors conclude their paper with a call for future research that addresses the fact that societies can evolve and interact in a non-linear manner.

b) Comments

In general, I tend to approach quasi-experimental long-run effects papers with seemingly robust and large effects on the treatment group, with a bit of skepticism. In this case however, at least from my point of view, the authors made an excellent job of convincing me of (at least) the internal validity of their study. This is in part thanks to the appealing empirical setting, which they carefully account for in the introduction, and the two following sections of the paper.  The use of pictures and references to visual remnants of history in East Austria as well as quotes of “anti-Turkish” comments in online forums and the analysis of FPÖ’s campaign content provides context to readers unfamiliar with the setting, which is great!


While I find the authors interpretation of the mechanisms at work plausible, the empirical examination of said mechanism lacks the attention to detail shown in section 4-6. Collective memory might well be a function of local embeddedness; however, the authors use the share of out-commuters from a village as a proxy for embeddedness. Arguably this variable could also be a proxy for a lot of other things such as the average income or the age structure of the population in the villages (which they do not control for in the models presented in table 13). Addressing the mechanisms at work more carefully would in my opinion further improve the paper.

As a final comment, the results provided by the authors raises many interesting questions. The possibility to activate history in places were a collective memory of past events is present by campaigning could be utilized by a range of actors. In this day and age when the costs for highly customized political advertising (on social media platforms for example) is lower than ever before, “activating history” could be utilized by political parties (or other interest groups) in locations were the probability of a positive effect is higher, whilst other (less controversial) campaigning strategies could be used in other locations. The fact that the authors implicitly raise the awareness of how distant history in subtle ways can influence our opinions is truly a good thing.

Environmental Shocks and their Effects on Imperial Rome’s State Capacity

Droughts of Dismay: Rainfall and Assassinations in Ancient Rome

By Cornelius Christian (Brock University) and Liam Elbourne (St. Francis Xavier University)

Abstract: We find that lower rainfall in north-central Europe (Gaul/Germania) predicts more assassinations of Roman emperors from 27 BC to 476 AD. Due to agricultural pressures on Germanic tribes, low precipitation caused more barbarian raids. These raids, in turn, weakened the Empire’s overall political stability, and reduced the costs of assassinating an emperor. We buttress our empirical analysis with case study evidence.


Circulated by nep-his on 2017/10/08

Review by Fernando Arteaga (George Mason University)



Was Imperial Rome’s political stability disturbed by environmental shocks? If so, what were the transmission channels? These are the two fundamental questions the authors aim to answer. Their thesis is straightforward: As any pre-industrial society, rainfall levels predicted agricultural output in Roman times. A lack of rain affected food availability, especially in the underdeveloped regions where Northern Germanic Tribes resided, making these societies more prone to raid Roman towns across the border. The incursions then created political conflict among the Romans themselves.


The text relies on econometric analyses and a couple of case studies to back up the argument. The main statistical test is simple: they regress Roman political stability on rainfall data. The main variable they use as a proxy of political unrest is the assassination of Roman emperors (as presented by Scarre 1995): the more emperors were killed, the less stability in the Empire. Alternatively, they also employ an index of inflation and new governmental infrastructure investment as a proxy for stability  (larger inflation and less imperial projects imply improved stability).  The rainfall variable comes from Buengten et al. (2011) own estimations on precipitation levels across France and Germany for all the period under study. Figure 1 displays the main data points used in the analysis. The authors find that negative rainfall shocks are both associated with more emperor’s being killed (Figure 2) and with having larger inflation rates and fewer investment projects. A decrease of one standard deviation in precipitation caused an 11.6% standard deviation increase in assassination probability. The regression is empirically valid because there is no possibility of reversal causality; precipitation is not a factor that may be influenced by Roman politics [1].



Figure 1: Roman Gaul/Germania (Yellow). Rainfall Datapoints (Green). Emperor Assassination Locations (Red)




Figure 2: The red line indicates the precipitation level, while the blue is the amount of Roman Emperors assassinated.


But how exactly does lack of rain destabilized Roman society? The paper’s hypothesis relies on the Germanic raid linkage: Germanic tribes attacked Rome when they had a poor harvest of their own, which then created unrest in Roman interior stability.  To test such assertion, they regress Germanic/Gaul incursions on the rainfall levels. The raid data they use comes from Venning (2010), who reviewed the many times the Roman Empire suffered raids through its history. The authors find a negative correlation: a decrease in one standard deviation in rainfall is associated with a 4% standard deviation increase in a number of raids. They corroborate the results by doing some robustness tests: 1) a placebo test, in which they regress non-Germanic raids on precipitation levels, which they find that had insignificant impact (which means that precipitation mattered only in Germanic zones, because they were the only ones that really suffered from a lack of rain); 2) an instrumental variable where the relationship between Roman instability and Germanic incursion is instrumented by rainfall. They find that “a standard deviation increase in the raid dummy [the presence of raiding] causes a 29.3% increase in the probability of assassination.”

To give more weight to their results, they present a brief recapitulation on the reigns of two assassinated Roman emperors: Severus Alexander (208-235) and Gallienus (218-268). The key insight is that both emperors faced important challenges on the Eastern and Northern borders, however only the latter had a relevant impact on Roman internal politics. On the East, the Roman Empire frequently collided with the Sassanid Empire (the other larger state in the area), but notwithstanding the severity of the clashes (at some point they even captured a Roman Emperor, the father of Gallienus) it never caused great civil unrest in Rome. However, on the North, Rome bordered the Germanic tribes (scattered non-organized societies) that did affect Rome’s stability.  The conclusion we get from the narrative is that the Germanic border was important/special precisely because it was very susceptible to environmental shocks, which then led to constant raiding; unlike the Sassanid border, in which the Romans faced a cohesive society that could successfully resist bad crops or confront military bravados on non-environmental factors.



I enjoyed reading the paper very much. It made me re-realize why I find Economic History fascinating: it deals with topics that are interesting in themselves (the politics of the Roman Empire! What is not to like about it?), that remain relevant for today’s problems (we still seek to understand the relationship between nature and political conflict very much), and it treats the issues under study with great care and humility (there is no grand universal theory, but a careful attempt to attain a reliable empirical finding- however small that is).

My main concern with the paper is that the authors never clarify the relationship between Northern Rome’s lack of state capacity and the barbarian incursions. The main narrative maintains that the Germanic raids were the source of Roman political unrest (that is the way I summarized the argument in the preceding section). But at several instances across the paper, the authors hint that Roman political complications in Gaul were themselves a precursory factor that made the Germanic incursions more menacing.

The problem is present in both the econometric analysis and in the case studies. If I understood it correctly (by looking at figure 1), the regressions they asses rely on data that captures rainfall in both Roman Gaul/Germania and non-Roman Germania. The argument is that lack of rain affected Germanic independent tribes more because they were less prepared than the Roman borderline towns. Intuitively, this sounds right. However, the assertion does not imply that alternative transmission channels could not matter too. Yes, Roman towns were better prepared to endure bad harvests than their Germanic neighbors, but that doesn’t imply that bad agricultural output in Roman towns could not be the cause of political instability in them. There may be a relevant omitted variable bias problem in the empirical specification. [2]

The problem seems clearer when we consider the conclusions the authors get from their case studies: in them, they compare the level of relevance local border town problems in Germania/Gaul and in Syria had on larger Roman politics. The Germanics were a constant thorn on Rome, but the Syrians weren’t. Why? The authors explicitly stress that Roman Gaul/Germania had lower state capacity than Roman territories next to Syria, and so it was easier to subdue unrest in Syria than in Gaul. However, if that is so, then we are led to beg the question of what causes what? Is weak state capacity due to raiding, or is raiding due to weak state capacity? The paper’s narrative emphasizes the former linkage (all of the quantitative estimations rely on that sole mechanism too) while, at the same time, it recognizes that the latter mattered too. Unfortunately, it never sets to disentangle the underlying causality. [3]


Buengten, Ulf et al. (2011)  “2,500 years of European climate variability and human
susceptibility.” Science, 331(6017), pp. 578-582

Scarre, Chris (1995) Chronicle of the Roman Emperors: The Reign-by-Reign Record of the Rulers of Imperial Rome. Thames & Hudson: London.

Scheidel, Walter (2015) “Orbis: the Stanford geospatial network model of the Roman world.”

Venning, Timothy. (2010) A Chronology of the Roman Empire, Bloomsbury Academic: New York.


[1] The authors confirm this by regressing rainfall at time t on lagged t -1 political stability.  It is interesting to note that this obvious observation may not be true for current events. Climate change is indeed affected by the domestic politics of some countries.

[2] I also remain confused about what data was used for some of the alternative estimations. For example, on the placebo test, they regress non-Germanic raids on precipitation levels. I assume they are using non-Germanic precipitation levels too. Otherwise, it would mean they would be testing how rain in Germania affects raids in non-Germania, which would make no sense.  However, they don’t clarify.

[3] My two cents on the Syrian/Gaul distinction is that geography and travel times may explain it. ORBIS (A project that reenacts the geospatial framework of the Roman Empire) allows us to estimate the times and cost of regular trips to different cities in the Roman Empire. A trip from Rome to Cologne would last 32 days on the fastest route and 63 days on the cheapest. A trip from Rome to Palmyra, on the other hand, would last 28 on the fastest route and 42 on the cheapest. This can provide a benchmark of the cost of mobilizing resources across regions: moving a Roman army could be 1/3 cheaper if it had to go to Syria rather than Germania. This significative figure implies that the costs of subduing unrest in Germania were larger and so more difficult.