Private Interest in the Public Good: Cholera and the Origins of Sanitary Reform

Daniel Gallardo-Albarrán and Kalle Kappner
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Daniel Gallardo-Albarrán: Wageningen University
Kalle Kappner: HU Berlin

No 573, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: European countries paved the way for modern economic growth in the 19th century with large-scale reforms facilitating human capital accumulation. The literature has looked at the role of elites in broad education investments, but less attention has been devoted to reforms promoting workers' health, a key component of human capital. This paper studies the impact of the 1866 cholera outbreak on modern waterworks construction in the German Empire to test the hypothesis whether concerns about workers' health may have compelled elites to invest in health-enhancing public goods. We find that the epidemic raised the annual probability of building waterworks by about 35%. Exogenous variation relying on the cholera-spreading effect of military movements during the Austro-Prussian War in 1866 further underpins this result. Quantitative and qualitative evidence indicates that non-agricultural elites employing more productive capital and better-skilled workers pushed for reform to avoid the costly prospect of future labour shocks. Long-term analyses show sizeable and persisting effects of the epidemic on public health and development outcomes shortly before the First World War.

Keywords: political economy; public goods; sanitation; cholera; elites (search for similar items in EconPapers)
JEL-codes: H41 H54 I18 N33 N93 (search for similar items in EconPapers)
Date: 2026-05-19
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