Friday, August 25, 2006

de Soto -- right and wrong

An interesting article in The Economist (subscription required, so no link here) highlights an Argentine study of a Buenos Aires neighborhood where half the people received land titles and the other half didn't. The study, called Property Rights For the Poor, (available HERE in an acrobat file) uses the Quilmes neighborhood as a test case for the theories of Hernando de Soto, who suggests that simply giving out land titles will allow squatters access to mortgages and other forms of credit that will liberate the dead capital inherent in their homes. The results: while having a title deed did encourage residents to invest in their homes, it did not give them more access to credit or create any increase in their incomes.

Families that had title deeds tended to have fewer kids, though, allowing the authors to conclude that "entitling the poor increases their investment both in the house and in the human capital of their children, which will contribute to reduce the poverty of the next generation."

No comments: