Informality is only accepted inasmuch as it fulfills a function for social actors and economic agents. The fact that institutions are informal (or formal, for that matter), is of no relevance, what counts is the level of credibility (i.e. functionality) that these institutions rally at a given time and space. Thus, the fact that informal housing and land tenure are credible today is not implying that they might still be credible a few years down the road, or in another spatial context. That outcome depends on the interactions, bargaining and conflict of actors that shapes institutions.
This question is related to the questions:
- Is common property more credible than private or public property?
- Does the flexibility of institutions affect investment behavior?
- Does the prediction that persisting institutions are functional, imply they are stable?