Institutions and the Rate of Return on Cattle: Evidence from Bangladesh

This study extends the recent debate on the rate of return on cattle rearing in India, triggered by Anagol, Etang, and Karlan (2017) and followed by others, to the Bangladeshi context and finds that the apparent paradox of widespread cattle rearing despite negative returns in India is absent in Bangladesh. We use a nationally representative two-year panel data for rural Bangladesh and find that the average and marginal returns on raising cows and bullocks are positive and high in both 2011 and 2015. We show that appreciation of the value of cattle is the major contributing factor to positive returns. The existence of cattle markets where cattle can be freely traded for slaughter, milk production, or for any other purpose—which is constrained to various degrees in India—is the key to high and positive returns in Bangladesh.