--- title: "The Economic Origins of Government: Allen, Bertazzini & Heldring (2023)" description: >- River shifts in ancient southern Iraq (~2850BCE) caused new state formation, canal construction, tribute payment, and growth of administrative buildings, supporting cooperative over extractive theories of government origins, in a new archeological panel dataset spanning 3900BCE-2700BCE. American Economic Review 2023, open access. Eight core results with source locators, the identification strategy, and regression specifications; LLM-distilled, not human-verified. sidebar: label: Allen-Bertazzini-Heldring 2023 order: 1 tags: [paper-summary, economic-history, political-economy, state-formation, public-goods, natural-experiment, difference-in-differences, panel-regression, open-access, peer-reviewed, unreplicated, data:cdli] paper: authors: Robert C. Allen, Mattia C. Bertazzini, and Leander Heldring authorList: - { family: Allen, given: Robert C., orcid: "0000-0003-2079-5683", affiliation: New York University Abu Dhabi } - { family: Bertazzini, given: Mattia C., affiliation: University of Oxford } - { family: Heldring, given: Leander, orcid: "0009-0009-3351-559X", affiliation: Northwestern University (Kellogg) } year: 2023 venue: American Economic Review 113(10), October 2023, 2507-2545 venueShort: AER 2023 doi: 10.1257/aer.20201919 jel: codes: [D72, H11, H41, N45, N55, Q15] assignedBy: authors date: 2026-06-24 topics: - "Culture, Economy, and Development Studies" - "Historical Economic and Social Studies" - "Colonialism, slavery, and trade" dataAccess: public outcome: - probability of grid cell being part of a state - probability of canal construction (public good provision) - probability of tribute payment being recorded in cuneiform tablets - number of administrative buildings in nearest city (state capacity) outcomeClass: [political-development] license: >- Open access (freely available on AEA website; OpenAlex open_access_pdf confirmed); no CC licence found in Crossref REST API license[] block; AEA CC-BY policy for papers accepted 2022 and later may apply but was not confirmed from metadata alone. licenseShort: open-access access: open machineAccess: >- open PDF at https://www.aeaweb.org/articles/pdf/doi/10.1257/aer.20201919 (OpenAlex open_access_pdf; AEA article page shows Complimentary access; Crossref license[] empty; checked 2026-06-24) redistribution: extract-only resultsCount: 8 citedByCount: 49 methods: role: applies-method family: reduced-form-causal buildsFrom: [difference-in-differences, panel-regression] identification: natural-experiment contributionType: [new-fact, new-data] mechanisms: [coordination-failure] introducesData: true scope: region: Iraq (southern Mesopotamia) period: "3900BCE..2700BCE (main); 5000BCE..1950CE (extended)" dataType: [administrative, other] granularity: [aggregate] n: "4,631 grid cell-periods (932 grid cells x ~5 archeological periods of ~240 yrs; 3900BCE-2700BCE main study)" findings: - ref: R1 outcome: probability of grid cell being part of a state metric: pp-effect value: "+0.14 (SE=0.04, Conley SE=0.03); comparison mean 0.06; treatment-period mean 0.24" direction: positive vsBenchmark: "river-shifting-closer placebo yields consistently negative coefficient" - ref: R2 outcome: "probability of newly formed state vs. expansion of existing state" metric: pp-effect value: "new state: +0.11 (SE=0.04, Conley SE=0.03); existing state: +0.02 (SE=0.02, Conley SE=0.01)" direction: positive vsBenchmark: "main result driven entirely by new state formation; existing-state expansion unaffected" - ref: R3 outcome: probability of canal construction (public good provision) metric: pp-effect value: "+0.12 (SE=0.03, Conley SE=0.02); comparison mean 0.28" direction: positive - ref: R4 outcome: probability of defensive wall in nearest city metric: pp-effect value: "+0.11 (SE=0.04, Conley SE=0.03); comparison mean 0.14" direction: positive - ref: R5 outcome: probability of tribute payment being recorded in cuneiform tablets metric: pp-effect value: "+0.21 (SE=0.06, Conley SE=0.10); comparison mean 0.19" direction: positive - ref: R6 outcome: number of administrative buildings in nearest city metric: coefficient value: "+0.44 (SE=0.15, Conley SE=0.17); comparison mean 0.70" direction: positive - ref: R7 outcome: probability of state formation by pre-shift population density metric: pp-effect value: "high density: +0.18 (SE=0.05, Conley SE=0.03); low density: +0.03 (SE=0.02, Conley SE=0.03); Chow p=0.06" direction: positive vsBenchmark: "effect 6x larger in high-density than low-density cells" - ref: R8 outcome: probability of canal construction across all six river shifts (extended panel) metric: pp-effect value: "+0.11 (SE=0.02, Conley SE=0.02); comparison mean 0.40 (5000BCE-1950CE full panel)" direction: positive vsBenchmark: "consistent across first-state period (+0.15) and subsequent-state period (+0.10)" resultType: new-finding relatesTo: - { cite: "Olson (1993)", doi: '10.2307/2938736', relation: tests, note: "roving-bandits theory predicts states form where rivers remain (most surplus to extract); paper finds the opposite" } - { cite: "Carneiro (1970)", doi: '10.1126/science.169.3947.733', relation: tests, note: "circumscription theory predicts states form where exit is costly; paper finds cooperative coordination demand dominates" } - { cite: "Acemoglu and Robinson (2000)", doi: '10.1162/003355300555042', relation: builds-on, note: "framework for bargaining between social groups over public goods and state formation" } - { cite: "Mayshar, Moav, and Pascali (2022)", doi: '10.1086/718372', relation: cites, note: "land storability as a driver of early state formation; an alternative supply-side channel" } - { cite: "Sánchez De La Sierra (2020)", doi: '10.1086/703989', relation: cites, note: "empirical evidence for extractive state formation in the Congo; contrasting setting and mechanism" } openQuestions: - >- State formation is historically rare even where coordination opportunities seem ubiquitous; the paper argues effects concentrate where cooperation returns exceed the outside option of migration and nomadism, but the general scarcity of states remains a challenge to the cooperative interpretation (pp.2509, 2535-2537). - >- Whether the cooperative origins of the first states can explain later, more extractive governments: once enforcement power is ceded to the state, it can be repurposed for extraction, but the paper does not trace this transition beyond the extended canal panel (p.2510, 2537). replicationCode: url: "https://doi.org/10.3886/184167EV1" status: available extraction: - { by: "paper-distiller (claude-sonnet-4-6)", date: 2026-06-24, role: extracted, note: "Full PDF read (pp.2507-2545); eight results extracted with table/page locators from the source PDF. Not human-verified. Not reproduced." } - by: paper-verifier (claude-sonnet-4-6) date: 2026-06-24 role: verified note: "All 8 Core-results rows verified against Tables 3-6; all locators and magnitudes confirmed correct. JEL codes corrected from LLM-assigned [D72, H41, N45] to authors' official codes [D72, H11, H41, N45, N55, Q15]. Equations (1) and (2) verified term-by-term. Note: introductory paragraph (p.2509) cites administrative buildings effect as 0.6/mean 0.75, but Table 4 col 4 shows 0.44/mean 0.70; wiki correctly uses the table value." licenceVerification: - source: "Crossref REST API works/10.1257/aer.20201919" checked: 2026-06-24 by: "paper-distiller (claude-sonnet-4-6)" found: "license[] block is empty (no CC licence metadata); paper freely accessible on AEA website per OpenAlex open_access_pdf field; AEA article page shows Complimentary access" rightsSignalConflict: false --- **What this is.** The paper's core results, the natural experiment it exploits (river shifts in ancient southern Iraq), the identification strategy, and the main estimating equations: enough to know what it found and how, without reading all 39 pages. To replicate or extend it, read the full source at [https://doi.org/10.1257/aer.20201919](https://doi.org/10.1257/aer.20201919). ## TL;DR The paper uses river shifts in southern Mesopotamia around 2850BCE as a natural experiment to test two competing theories of government formation. When a river shifts away from a farming area, direct irrigation becomes impossible and public canals requiring multi-community coordination are needed. This creates demand for a coordinating government (cooperative theory), whereas an extraction-based theory (where government forms to collect surplus) predicts states would be more likely where the river stays. Constructing a new archeological panel dataset of 5x5 km grid cells across southern Iraq for the period 3900BCE-2700BCE, the paper runs a panel difference-in-differences design comparing grid cells that lost river access to control cells that did not. A river shifting away increased the probability of state formation by 14 percentage points, the probability of canal construction by 12 percentage points, the probability of tribute payment by 21 percentage points, and the number of administrative buildings by 0.44. The result is entirely driven by new state formation, not expansion of existing states. Text analysis of 5,885 surviving cuneiform tablets shows increased mentions of lineage-leader titles and tribute after the shift, consistent with the cooperative interpretation. Extractive theories of Olson (1993) and Carneiro (1970) predict the opposite sign, and the results reject them. ## Core results Magnitudes and standard errors are as reported; clustered SE in parentheses, Conley (1999) SE in brackets. Locators point into the source PDF (pp.2507-2545). | \# | Result | Locator | Magnitude | |---|---|---|---| | R1 | River shift away increases probability of **state formation** by 14pp | Table 3, col 1, p.2530 | +0.14 (SE=0.04) [0.03]; sample mean 0.06; treatment-period mean 0.24; pretrend p=0.23 | | R2 | Effect driven entirely by **new state formation**, not expansion of existing states | Table 3, col 3-4, p.2530 | New state: +0.11 (SE=0.04) [0.03]; existing state: +0.02 (SE=0.02) [0.01] | | R3 | River shift increases probability of **canal construction** by 12pp | Table 4, col 1, p.2534 | +0.12 (SE=0.03) [0.02]; mean 0.28; pretrend p=0.81 | | R4 | River shift increases probability of **defensive wall** in nearest city by 11pp | Table 4, col 2, p.2534 | +0.11 (SE=0.04) [0.03]; mean 0.14; pretrend p=0.57 | | R5 | River shift **doubles** the probability of **tribute payment** being recorded | Table 4, col 3, p.2534 | +0.21 (SE=0.06) [0.10]; mean 0.19; pretrend p=0.20 | | R6 | River shift increases **administrative buildings** in nearest city by 0.44 | Table 4, col 4, p.2534-2535 | +0.44 (SE=0.15) [0.17]; mean 0.70; pretrend p=0.69 | | R7 | Effect concentrated in **high population density** areas before the shift | Table 5, Panel A, p.2536 | High: +0.18 (SE=0.05) [0.03]; low: +0.03 (SE=0.02) [0.03]; Chow p=0.06 | | R8 | Result holds across the **full 7,000-year panel** (5000BCE-1950CE, all 6 river shifts) | Table 6, col 1, p.2539 | Canal: +0.11 (SE=0.02) [0.02]; mean 0.40 | **Overall (paper's conclusion, p.2540-2541).** Where rivers shifted away, communities formed new states, built canals and defensive walls, and paid tribute to their governments. These results are consistent with cooperative (demand-side) theories: states form to solve coordination failures in public good provision, not to extract. The first states resembled scaled-up versions of the lineage social structure that preceded them, with government coordinating between extended kinship groups (lineages) rather than ruling over individuals. ## Theory / model The paper has no formal mathematical model. Instead it derives two competing sets of testable hypotheses from the theoretical literature on state formation and maps them onto the sign of the main difference-in-differences coefficient. **Cooperative (demand-side) theory.** Government is an organization with a comparative advantage in providing public goods (Baumol 1952; Samuelson 1954). Problems of externalities and coordination failure (Olson 1965) prevent private provision. When a river shifts away, arid-land farming can continue only via public irrigation canals spanning multiple communities. No individual community can credibly commit to build and maintain such canals alone. This coordination failure creates demand for a government. Members pay tribute in exchange for canal access and defense. The framework builds on Acemoglu and Robinson (2000), who model the bargaining between social groups that determines whether and what form of government emerges. Under this view, states form where the river shifted away (positive $$\beta_0^{\text{treatment}}$$ in equation 1). **Extractive (supply-side) theory.** Government is an organization founded by an elite with coercive power to manage extraction (Carneiro 1970; Olson 1993). Under Olson (1993), "roving bandits" settle where the expected tax base is largest and find it worthwhile to provide minimal stability in exchange for an extractive monopoly. Where a river shifts away, the agricultural tax base collapses: land is no longer productive without irrigation. A predatory ruler would prefer to locate where the river remains. Under this view, states form where rivers stay, not where they shift (negative or zero $$\beta_0^{\text{treatment}}$$). Mayshar, Moav, and Pascali (2022) provide recent empirical support for a related extractive channel in which taxable surplus (storable crops) predicts state location. The circumscription theory of Carneiro (1970) also fits this supply-side cluster: states arise where it is hard to escape extraction. **Empirical mapping.** The sign of the main coefficient distinguishes the two clusters. A positive and significant $$\beta_0^{\text{treatment}}$$ (R1 = +0.14) is consistent only with cooperative theories, since extractive theories predict the opposite or no effect. The placebo test (estimating the effect of a river shifting closer rather than away) yields a consistently negative coefficient throughout the paper, confirming the cooperative interpretation. Sánchez De La Sierra (2020) finds extractive state formation in the Congo using a comparable natural-experiment design; the two settings differ in the nature of the shock and the role of public goods versus looting. ## Method The paper applies a standard panel difference-in-differences estimator via OLS, using the first large river shift in history (around 2850BCE) as a quasi-random shock. It builds on `difference-in-differences` and `panel-regression`. **Treatment definition.** A 5x5 km grid cell $$c$$ is defined as on a river in period $$t$$ if its centroid is within 5 km of the nearest river. Cell $$c$$ is treated in period $$t = 0$$ (Early Dynastic I, 2900BCE-2700BCE) if it was on the river in period $$t - 1$$ (the Jemdet Nasr period, 3100BCE-2900BCE) and is no longer on a river in period $$t$$. Treatment is time-invariant and applies to roughly 13 percent of the 1,374 grid cells in the study area (Table 1, p.2517). Rivers shift by 30-40 km on average, so treated cells lose water access entirely, not marginally. **Main estimating equation.** The panel DiD model for the main study period is (equation 1, p.2525): $$ Y_{ct} = \sum_{k=-4}^{0} \beta_k^{\text{treatment}} \times \mathbf{1}\{\text{period}_k\} \times \text{treated}_c + \rho_c + \gamma_t + v_{ct} + \varepsilon_{ct} \tag{1} $$ where $$Y_{ct}$$ is the outcome for grid cell $$c$$ in period $$t$$; $$\text{treated}_c$$ equals 1 if cell $$c$$ loses river access at $$k = 0$$; $$\mathbf{1}\{\text{period}_k\}$$ are indicators for each period $$k$$ relative to treatment; $$\beta_k^{\text{treatment}}$$ are the period-relative-to-treatment interaction coefficients (normalized to zero at $$k = -1$$, the last pre-period); $$\rho_c$$ are unit (grid cell) fixed effects; $$\gamma_t$$ are period fixed effects; $$v_{ct}$$ is a vector of period fixed effects interacted with time-invariant covariates (survey area indicators, average rainfall, average temperature, pre-shift urban status); and $$\varepsilon_{ct}$$ is clustered at the grid cell level. Conley (1999) standard errors with a 484 km spatial cutoff are reported in parallel. The coefficient of interest is $$\beta_0^{\text{treatment}}$$: the treatment effect in the Early Dynastic I period (the period of first state formation). Pre-period coefficients $$\beta_{-2}^{\text{treatment}}, \ldots, \beta_{-4}^{\text{treatment}}$$ serve as pretrend tests; all are indistinguishable from zero (pretrend p-values reported in Tables 3-4, pp.2530, 2534). **Extended panel estimator.** For all six river shifts across the full 7,000-year panel (5000BCE-1950CE), a pooled DiD (equation 2, p.2538) is estimated: $$ Y_{ct} = \beta \cdot \text{treated}_{ct} + \rho_c + \gamma_t + v_{ct} + \varepsilon_{ct} \tag{2} $$ where $$\text{treated}_{ct}$$ is now time-varying (equals 1 when cell $$c$$ is treated in period $$t$$ for any of the six shifts), and $$\beta$$ captures the average effect across all shifts. ## Empirical specifications All regressions are OLS. Unit of observation: 5x5 km grid cell. Time series: archeological period (average 240 years in the main sample). Standard errors clustered at the grid cell level; Conley (1999) SE with a 484 km cutoff in brackets. **State formation (R1-R2, Table 3, p.2530).** Equation (1) with two outcome definitions: column 1 uses an indicator for whether a grid cell is part of a city state, defined using administrative buildings (palaces, temples, ziggurats) and reconstructed territorial borders; column 2 uses only building presence without borders. Columns 3 and 4 decompose into new state formation (an indicator equal to 1 if the nearest city gains state status for the first time) and expansion of an existing state. All columns include grid cell and period fixed effects plus the four time-invariant covariate interactions. Pretrend p-values (0.23 and 0.24) confirm no differential pre-trends. **Public good provision and tribute (R3-R6, Table 4, p.2534).** Four separate regressions using equation (1): - Column 1: indicator for canal presence within 5 km of cell centroid, reconstructed from Chicago Oriental Institute excavation reports (Adams 1965, 1981; Adams and Nissen 1972). - Column 2: indicator for defensive wall in the nearest city, from Bryce (2009) and Meyers (1997). - Column 3: indicator for surviving cuneiform tablet in the nearest city (validated as a proxy for tribute payment and redistribution via keyword analysis of transliterated texts; Table RA29 in Results Appendix). - Column 4: total count of palaces + temples + ziggurats in the nearest city (measure of state capacity and administrative infrastructure). **Heterogeneous effects (R7, Table 5, p.2536).** Equation (1) estimated separately in two subsamples split by the median of the spatial lag of pre-treatment settlement density (a proxy for returns to coordination). The Chow test for coefficient equality has p-value 0.06. A second split by geographic costs (FAO potential productivity differential between irrigated and rainfed barley, and river water flow volume) yields similar heterogeneity. **Extended panel (R8, Table 6, p.2539).** Equation (2) estimated on 27,106 grid cell-period observations across all 31 archeological periods (5000BCE-1950CE). Columns 2-3 split the sample into the first two river shifts (pre-state and state formation) and the four subsequent shifts (within established states). The effect is positive and similar in both sub-panels. ## Datasets used | Dataset | Role in paper | Wiki page | |---|---|---| | Chicago Oriental Institute archeological surveys (Adams 1965, 1981; Adams and Nissen 1972) | Settlement history, canal network reconstruction, and city locations; basis for the 5x5 km grid panel covering 5000BCE-1950CE | No page yet | | Cuneiform Digital Library Initiative (CDLI) | 5,885 transliterated cuneiform tablets from the main study period; text analysis of tribute, canal, and lineage-leader term mentions (Section VII, Figure 6) | No page yet | | Administrative building and state border data (Heinrich 1982, 1984; Meyers 1997; Bryce 2009) | Identification of palaces, temples, and ziggurats; reconstruction of state territorial borders | No page yet | | River shift and course reconstructions (Cole and Gasche 1998) | Geographic reconstruction of river courses before and after each of six shifts; defines the treatment variable | No page yet | | FAO soil and agricultural potential data | Potential productivity of irrigated vs. rainfed barley cultivation; used for geographic heterogeneity subsamples (Table 5, Panel B, p.2536) | No page yet | Sample: southern Iraq, 1,374 grid cells of 5x5 km covering the area between Baghdad and Basra. Main study: 3900BCE-2700BCE, five archeological periods (~240 yrs each). Extended study: 5000BCE-1950CE, 31 periods. The replication dataset (including all constructed variables) is publicly available at [https://doi.org/10.3886/184167EV1](https://doi.org/10.3886/184167EV1). ## When to read the full paper Use the [original paper](https://doi.org/10.1257/aer.20201919) if you are: testing theories of state formation in other historical or contemporary settings, where the identification approach (demand-side shock to coordination costs) can be adapted (Section IV); studying public good provision and tribute across the full 7,000-year Iraqi panel, including under the Babylonian and Assyrian empires (Section VI and Table 6); examining the internal organization of the first states via cuneiform tablet text analysis (Section VII and Figure 6, p.2541); or extending the dataset to other archeological outcome variables using the replication data. The online Data Appendix (68 pages) describes dataset construction, coding procedures, and robustness exercises in full detail. ## Attribution and rights Source: peer-reviewed, *American Economic Review* 113(10), October 2023. Freely available on the AEA website; no CC licence detected in Crossref metadata; redistribution is extract-only. This distillation was extracted by an LLM on 2026-06-24 and is **not human-verified or independently reproduced**. > Allen, Robert C., Mattia C. Bertazzini, and Leander Heldring. > "The Economic Origins of Government." > *American Economic Review* 113, no. 10 (October 2023): 2507-2545. > DOI: 10.1257/aer.20201919.