Natural selection and economic growth

Share on FacebookShare on Google+Email this to someoneTweet about this on Twitter

**This is a cross-post from my blog Evolving Economics

As I have focussed my PhD research on the link between evolution and long-term economic growth, for months I have meant to blog on the core paper in this area, Natural Selection and the Origin of Economic Growth by Oded Galor and Omer Moav. I have held off writing this post pending finalisation some of my own related work, which I have now done.

This paper is somewhat of an outlier as I’m not aware of any other paper that models the Industrial Revolution as a result of natural selection (apart from a soon to be published paper by Galor and Michalopoulos). There is another paper by Zak and Park that examines population genetics and economic growth (a topic for another blog post) but they do not directly tackle the Industrial Revolution. In A Farewell to Alms, Greg Clark notes that Galor and Moav’s paper reignited his interest in this topic.

Galor and Moav’s paper is based on a model that has two types of people in the population. Each of these types has a different, genetically inherited preference for quality or quantity of children. The quality-preferring genotype wants their children to have higher human capital, so they invest more in their education, while the quantity-preferring genotype is more interested in raw numbers.

During the long Malthusian era in which both genotypes struggle to earn enough to subsist (i.e. during the thousands of years leading up the Industrial Revolution), the quality-preferring genotypes have a fitness advantage. As the quality-preferring genotypes are of higher quality, they earn higher wages. These higher wages are more than enough to cover education expenses, so they are also able to have more children than the quantity-preferring genotypes.

This fitness advantage leads the quality-preferring genotypes to increase in prevalence. As this occurs, technological progress increases, as the average level of education in the population drives technological progress. This in turn increases the incentive to invest in education, creating a feedback loop between technology and education.

As this goes on, the population grows. Per capita income does not increase as any technological progress is balanced out by population growth, which is the central problem of the Malthusian world.

Eventually, the rate of technological progress gets high enough to induce the quantity-preferring genotypes to invest in education. When this happens, the average level of education jumps, boosting technological progress and causing the Industrial Revolution.

During this process, the population growth rate changes. Up to the time of the Industrial Revolution, population growth increases with technological progress. However, when the level of technology leaps with the Industrial Revolution, the level of education becomes so high that population growth drops dramatically. Everyone is investing more into education than raw numbers of children.

From an evolutionary perspective, the Industrial Revolution also changes the selection pressure in the model. After the Industrial Revolution, the quality-preferring genotypes invest so much into education that they have lower fertility than the quantity-preferring genotypes. They then reduce in prevalence, their fitness advantage erased.

Galor and Moav paper work through the dynamics of the model using phase diagrams. It is not particularly easy or intuitive to see the processes working together in their paper, so my two PhD supervisors and I have just put out a discussion paper that describes simulations of the model – and shows the dynamics in a form that is easier to visually comprehend. In the chart below, you can see the dramatic jump in technological progress around generation 45 of the simulation, with per capita income growth also jumping at that time. Meanwhile, population growth drops to zero.

This second chart shows the change population composition. The quality-preferring genotype (genotype a) steadily increases in prevalence through to the Industrial Revolution, peaking at just under 5 per cent of the population. Afterwards, it is selected against.

This change in selection pressure has an interesting implication. While natural selection is the trigger of the Industrial Revolution, the population composition before and after the transition is the same. There is no difference in population composition between developed and undeveloped countries. The only time there is a difference in population composition is during the transition, when the quality-preferring genotypes peak.

In some ways, the natural selection occurring in Galor and Moav’s model is a sideshow to the main event, the quality-quantity trade-off. In a similar model by Galor and Weil, a scale effect triggered the Industrial Revolution – that is, the concept that more people leads to more ideas, so technological progress increases with population growth. I am sure that other triggers could be substituted.

That highlights the point where I am not convinced that the model is true (to the extent that a model can be). As far as human evolution relates to economic growth, I expect that inherent quality is more important (and by quality, I mean economically useful qualities) than the quality-quantity trade-off. The Industrial Revolution was possible because higher quality people were selected for in the lead-up. Higher quality people had more children as they were genetically of higher quality and they passed their high quality genes to these children. The investment in quality is choosing a high quality mate.

If quality is inherent, a high-quality person should have as many children as possible and this would have little effect on quality. For a man of low resources, his larger problem is convincing a woman to mate with him and not deciding on the right quantity-quantity mix.

The other thing that I should note is that, like most economic models, Galor and Moav’s model includes consumption with no clear evolutionary rationale (an issue I have discussed in an earlier post). Why do people in the model consume more than subsistence? If some people chose to focus all excess consumption into raising children they would come to dominate the population. This might be justified as being something to which the population has not yet adapted, but that explanation does not satisfy me.

Having made these quibbles, the model is still an impressive feat. It would not have been an easy task to create a model with technological progress, population and per capita income all following a path that resembles the last few thousand years of economic growth. There are some further issues and extensions to the model that we explore in the discussion paper I referred to above, but I’ll talk about them in my next post.

Galor, O., & Moav, O. (2002). Natural Selection and the Origin of Economic Growth The Quarterly Journal of Economics, 117 (4), 1133-1191 : 10.1162/003355302320935007

6 Comments

  1. - vulcanized rubber and the spreading use of condoms (mid 1800′s)
    - The pill (early 1960′s)
    That one can now focus more on education (mainly applies to women, but also to men that could not even with the help of extended family support children) is the after effect.

    The scale effect with competition produces progress in populations with a higher base IQ. The quality factor is subjective with regards to being tied to IQ. If the land is scarce in resources then being stronger is perhaps better as you can kill and take from your competitors. Brawn is the champion of quality in that case. Lies and the ability to con from others could lead to the quality factor in some populations.

    I think a slightly modified model of scale with regards to a population’s base will give a better result that can be applied across all populations. Regardless of my very narrow scoped comments I think the graphs you posted still show reasonable expectations of where we as a worldly people are heading. I just think the cause and effects of the models are a little off.

    Back to birth control for a minute though. I do not believe that education has pushed people to breed less for some advantage of quality. Instead I think it is simply that the brighter man has always molded nature as best as he could. With current technologies related to reproduction, this is very easy to do. Now (last 30 something years?) you have a culture in which baby making is more often looked down upon as if it is a thing the poor do. (An exception would be Utah where it is still rather popular/expected that you have a family.)

    Lastly sorry for such a poorly worded response. I have a seminar to attend and you subject was rather large as it is outside of my daily readings. I may give it another look when I return.

  2. Whenever I read something like this, I wonder if similar phenomena take place on other scales or in other guises. Like within bacterial colonies, or among different cell types within the human body.

    Like for instance, what (“optimization-ally” speaking) drives the relative rates of synaptic growth vs. mitosis in other cell types that merely provide body mass or metabolic capacity? Maybe this kind of economic model, when translated to multicellular organisms, could explain the correlations in risk between certain mental conditions and metabolic disorders.

  3. Morstern, I tend to agree that the introduction of contraception makes the relationship between quantity and education more complex than the model suggests. As for IQ, that is one of the elements in my mind when I talk of inherent quality.

    arosko, in many ways, this model is simply taking the r-K selection model of biology and putting it into an economic context. Although I’m not particularly familiar with the research, my understanding is that r-K selection theory can be (and has been) applied at all scales.

  4. “If some people chose to focus all excess consumption into raising children they would come to dominate the population.”

    Looks likely to happen over the next century or two, even without considering immigration in Western countries. Some small fundamentalist populations are growing very, very quickly. The USA might become mostly Amish 100-200 years from now :)

  5. “as the average level of education in the population drives technological progress. This in turn increases the incentive to invest in education” (…)

    “Eventually, the rate of technological progress gets high enough to induce the quantity-preferring genotypes to invest in education.”

    Why?

  6. On the first question, human capital is dependent on the level of education, which increases human capital, and technological progress, which decreases it. Technological progress decreases human capital as it makes the education received redundant – e.g. you learn to use one form of software and it is then superseded. At lower levels of human capital, there are higher returns to education. Hence, human capital eroding technological progress increases the returns to education and the incentive to invest in it. I should note that this is an assumption of the model rather than a result of the model.

    On the second, the quantity-preferring types need more incentive to invest than the quality-preferring types. As technological progress speeds up, the incentive increases (as indicated by my first answer) and the incentive becomes large enough that the quantity-preferring types respond to it through educating their children.

    (and sorry for the long time for a response – I’ve been on the road for the last week)

Leave a Reply

a