Do expectations on oil discoveries affect civil unrest? Micro-level evidence from Mali

Abstract

In recent years, many oil finds were made along the shores of Africa, often triggering high hopes. But do expectations of the consequences of oil discoveries affect subsequent conflict? A number of arguments back this idea. Relative deprivation theory suggests that oil discoveries raise hopes of windfalls, which if not fulfilled, result in frustration and thus increase conflict risk. In contrast, cognitive psychology assumes that the effect of expectations largely works through a confirmation bias and thus depends on whether individuals attach positive or negative expectations to oil discoveries. Given the lack of appropriate data, these relationships have never been tested empirically. Using unique georeferenced data from a representative survey in Mali in 2006, this paper addresses this gap. Our results suggest that expectations indeed significantly contribute to subsequent conflict. The negative or positive character of expectations is critical, working as "self-fulfilling prophecy" rather than frustrated "great expectations": when people hold negative views on the future effects of oil, the risk of civil unrest increases.