On the Near Optimality of Aboriginal Property Rights
Abstract: An established tradition in law and economics is that aboriginal property rights reflect the human propensity to economize on all margins including institutional margins. Bailey and Posner have argued separately that this propensity leads to well-being maximizing institutions and behavior even in the most culturally isolated contexts. The present paper examines that proposition. The paper builds on Acemoglu and Johnson who distinguish property rights for large aggregations of human groups from “contracting institutions,” or the ‘property rights’ of smaller groups of people. The paper argues that there may be good reason to believe that contracting institutions evolve toward a near optimum, but property rights institutions for larger entities do not necessarily evolve toward maximum well-being configurations. The net result is dispersion of property rights across nation states and corresponding dispersion in performance. Performance data for Africa are examined. The evidence shows that property rights at the nation-state level enhance productivity but measures associated with aboriginal economic institutions do not.
