In a recent paper published in the Quarterly Journal of Economics, HBS professor Rafael Di Tella, Sebastian Galiani of the University of Washington, St. Louis, and Ernesto Schargrodsky of the Universidad Torcuato Di Tella comparing the beliefs of two groups of squatters living in the Solano neighborhood on the outskirts of Buenos Aires, Argentina.
What the scholars found could be the start of a better understanding of why capitalism remains unpopular through large swaths of the world—particularly in areas where property rights are weak or nonexistent.
In an unusual set-up that Di Tella describes as "a natural experiment," about 1,800 landless families (organized by a Catholic priest) occupied the area in 1981, believing it was owned by the state. In fact, it was made up of privately held tracts of land belonging to 13 owners. Over the years, the squatters resisted several eviction attempts, until a change in government in 1984 resulted in a state proposal to pay off the owners and allocate the land to the squatters. Each owner was given the option of accepting the deal or suing to obtain higher compensation. By 1998, 9 of the owners had settled, and the tract of land was transferred to the squatters. With the remaining 4 lawsuits still pending, 62 percent of the squatters now hold title to their land, while 38 percent do not.
As a result, squatters who enjoyed the security of property rights existed in proximity to those with no legal claim to the land on which they lived. For Di Tella and his coauthors, the situation presented the ideal opportunity to research the beliefs of those who hold property rights versus those who do not, all other conditions being equal.
The Rest @ Harvard Business Review
What the scholars found could be the start of a better understanding of why capitalism remains unpopular through large swaths of the world—particularly in areas where property rights are weak or nonexistent.
In an unusual set-up that Di Tella describes as "a natural experiment," about 1,800 landless families (organized by a Catholic priest) occupied the area in 1981, believing it was owned by the state. In fact, it was made up of privately held tracts of land belonging to 13 owners. Over the years, the squatters resisted several eviction attempts, until a change in government in 1984 resulted in a state proposal to pay off the owners and allocate the land to the squatters. Each owner was given the option of accepting the deal or suing to obtain higher compensation. By 1998, 9 of the owners had settled, and the tract of land was transferred to the squatters. With the remaining 4 lawsuits still pending, 62 percent of the squatters now hold title to their land, while 38 percent do not.
As a result, squatters who enjoyed the security of property rights existed in proximity to those with no legal claim to the land on which they lived. For Di Tella and his coauthors, the situation presented the ideal opportunity to research the beliefs of those who hold property rights versus those who do not, all other conditions being equal.
The Rest @ Harvard Business Review
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