Demand for Formal and Informal Institutions in Heterogeneous Societies

• In Event: Strengthening States in Strong Societies: Evidence from Sub-Saharan Africa

Abstract

Across sub-Saharan Africa, formal legal institutions compete with customary institutions for influence. Leaders of informal institutions, such as chiefs, have retained considerable powers even in states that abolished their positions upon gaining independence. We document considerable variation in the strength of informal institutions within states and advance a novel demand-side explanation for this pattern. We theorize that local ethnic context shapes individual preferences for informal versus formal forums to resolve their disputes. The demand for informal, community institutions is lower in ethnically heterogeneous communities because local, informal leaders are less equipped to sanction opportunistic behavior and resolve disputes across ethnic group boundaries and because the share of ethnic outgroup members, typically disadvantaged under neo-customary law, increases with ethnic diversity. We further hypothesize that individuals’ minority versus majority status within their communities and within the larger national political community influences their decision to use formal, state as opposed to informal, community institutions. We support this argument using individual- and community-level data from Afrobarometer and the Ghana Living Standards Survey. The paper offers a novel explanation of considerable subnational variation in the influence of chiefs and challenges the conventional wisdom that high ethnic fractionalization explains the institutional weakness in Africa.

Authors

• Paige Bollen, Massachusetts Institute of Technology

• Volha Charnysh, Massachusetts Institute of Technology