Posh spice or scary spice? The impacts of Madagascar's vanilla boom on household well-being

We contribute to the long debate on whether export commodity revenues can lead to economic development by studying the consequences of the nearly six-fold increase in the global price of vanilla on vanilla farming communities in Madagascar. We find a substantial increase in the wealth and informal savings of smallholder vanilla farmers. This increase in material well-being is accompanied by improvements in cognitive skills and psychological well-being, as well as increased optimism regarding the country's economic conditions and trust in the ruling party and the president. This increased trust is likely not a result of improvements in public service delivery as we find no increase in the use of public services or access to public infrastructure. Despite the widespread gains for vanilla producing households we find no improvements in human capital outcomes for children and in fact we see evidence of a decline in school enrollment for boys. There is evidence of rising levels of vanilla theft, but we observe no increases in other types of crime or even fear of crime. These results indicate that higher returns on cash crop production can improve the well-being of adults in multiple dimensions, but the effects on children are more ambiguous