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December 8, 2007

Genetic Distance and Economic Development

For those who are tired of hearing about mortgage markets, financial crises, and how the Fed should react, something different:

Putting the (Molecular) Clock on Development, by David Warsh, Economic Principles: ...Blood-typing gave geneticists their first crude tool for investigating the human family tree. Chemical DNA-testing in the 1980s gave them an extensive laboratory for studying its history. Since then, a detailed picture has emerged of the human family tree: the immigration out of Africa and gradual dispersion of the human population over the surface of the planet.

A fair part of what we know about the human diaspora we owe to the efforts over the years of 85-year-old Luigi Cavalli-Sforza and his many research partners. ... He ... established that the phenomenon of "genetic drift" could be used as kind of clock to measure the length of time since two populations -- the mountain village, the city parish -- had last shared common ancestors.

In the 1960s, he and Anthony Edwards, now of Cambridge University, devised various methods to calculate the "genetic distance" between pairs of populations..., based on as many genes as could be detected. Preferably these would be "neutral" genes, such as those that determine blood type, because they would change randomly over time, as opposed to genes governing stature or strength, which would be subject to selection pressures. ...

And when the code-breaking genomics revolution spread to Stanford in the 1980s, the Italian professor and his colleagues were ready to participate... Thanks to chemical testing, the "clock" of drift had become molecular. For genetic anthropologists, that meant being able to construct the detailed narrative of human migration...

His work put Cavalli-Sforza in the thick of some of the most interesting controversies of the past thirty years: the origins of agriculture and the role that migration played in hastening its spread; the origins of languages and the interplay between biological and cultural evolution; the spread, over a period of around a thousand years, of large stone buildings known as megaliths (Stonehenge, the Sardinian Nuraghi, etc.) along a narrow coastal strip from the Atlantic coast to India and almost to Japan, starting about 3800 years ago. ...

I mention it here because a pair of pioneering economists recently have imported the molecular clock of genetic distance and brought it to bear to good effect on another controversy. Enrico Spolaore of Tufts University and Romain Wacziarg of Stanford University have put the new tools to work to study patterns of the diffusion of economic development around the world over long periods of time. ... They find that barriers to swift adoption of the latest innovations from the world's technological frontier may be not so much biological or political as cultural.

But their methods has the potential to make economists rethink some of their most cherished assumptions, that people are pretty much the same all around the world, that "culture" matters little, or not at all. ...

The utility of Spolaore and Wacziarg's approach rests on a key distinction borrowed from the controversies over the development of language, agriculture, tools and such, between vertical and horizontal transmission. Vertical transmission occurs across biologically-related generations within a group -- norms, language, skills, passed along by parents and grandparents to children (and vice versa, as with new languages or computers). Horizontal transmission takes place across different groups and populations -- the adoption of a Chinese invention such as coal-mining or the compass by Italians, for example.

The authors venture two key hypotheses. First, genetic distance translates into differences in all kinds of vertically-transmitted characteristics, traits transmitted not necessarily through DNA, but also culturally, among genetically-related individuals. Second, long-term differences in these vertically-transmitted characteristics operate as barriers to the diffusion of new technological and institutional ideas. In other words, "people who share similar histories and cultures are more likely to learn from each other;" while differences persist when there are strong barriers.

Empirically, the economists found that genetic distance seems to map well to differences in income per capita, even when controlling for factors such as geographical isolation, climatic factors, transportation costs and other traditional measures of difference. The relationship holds for the differences that are observed around the world today, they say; also for income differences as they have ebbed and flowed since 1500, and, not surprisingly, for the differences within Europe. Indeed, genetic distances between European populations are relatively small -- much smaller than the extremes in the world population -- yet even there, the authors found a large effect of genetic distance on income, a result consistent with their surmise that cultural and historical differentials pose barriers even in countries that are cheek-by-jowl.

Moreover, in the presence of a shock -- the Industrial Revolution, in particular -- the effect of genetic distance on income goes up sharply, then gradually declines, just as you would expect, as the discoveries and secrets of the innovator-population and its closest relatives are gradually learned by the rest. (It was easier for Boston's Francis Cabot Lowell to copy the secrets of the English power loom than for, say, a corresponding Egyptian or Javanese entrepreneur of the early nineteenth century.)

But what about nations where genetic distance is great, determined pairwise, but where income disparities are relatively small? In other words, what about Japan? Perhaps because there are additional factors that affect their culture, perhaps for purely random reasons, it may be that the British and the Japanese are closer to each other, at least on certain dimensions, than are the Japanese to the Chinese. Spolaore says, "The dolphins are very far genetically from the fish. But on some traits -- say, body shape -- they might be closer to tuna than to other mammals -- say, cows. British and Japanese societies both developed on large islands which are close, but separate, from the continental mainland -- perhaps a kind of cultural 'convergent evolution' on some dimensions may have something to do with that."

Clearly economists' study of the differences among nations has a long way to go -- a very long way. But the effect of Spolaore and Wacziarg's clever demonstration is put habits, norms and languages firmly back on the table as a possible source of the frictions that make development hard rather than easy, especially whenever societies must learn from each other or fall behind. Economists traditionally have ascribed the difference between rich nations and poor to simple factors -- natural resource endowments, investment gaps, Malthusian traps, insufficient education, absence of "the rule of law." One recent fad has been to blame monopoly-like barriers to entry erected by those who govern the poor.

That kind of talk will continue. ... But at the frontiers, expect geneticists, linguists, archeologists, anthropologists, linguists and, now, economists and political scientists to engage in an increasingly fruitful conversation. As Luigi Cavalli-Sforza says, "Since we know little of our past, and the sciences that study it often provided separate (and noncommunicating) fragments of knowledge, it is important for them to learn how to help each other."

Here's more, including conversation with one of the authors in comments.

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