Natural selection and economic growth

Natural Selection and the Origin of Economic Growth by Oded Galor and Omer Moav is somewhat of an outlier. I’m not aware of any other paper that models the Industrial Revolution as a result of natural selection, apart from a similar paper by Galor and Michalopoulos. Zak and Park wrote a paper that examines population genetics and economic growth (my post on Zak and Park’s paper is here) 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, but Clark does not model his hypothesis.

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 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 (and the lead up encompasses thousands of years).

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

11 comments

  1. All of this is only natural selection if you’re going Lamarckian – the odds of any of this being genetically transmissible are tiny. Lamarck had the basic process right, but screwed up the mechanism, so it’s not a huge mistake – but biologists will be inclined to point and laugh at the assertions here.

    1. Thanks for your comment Darby. There is no Lamarckian transmission of traits in this model – it is solely genetic through inheritance of the preference between quality and quantity. The child of a high quality parent is not also high quality unless their parent educates them. The parent does this as they have the genetically inherited preference for educating their children.

  2. Sorry, this is nonsense. Quality-quantity as a genetically-bound choice applies to organisms (like fish) acting in a feedback-loop with environmental resources, but none of those are even primates, and the idea that this is an inheritable trait in humans (which has been tested, if badly) has no support. You would be better off with a Lamarckian model, which you even describe, until you add the second-layer ridiculous suggestion that choosing to educate (which is meaningless, anyway – such a choice would only have applied to a handful of recent generations, too brief for such weak selection forces to affect anything) is biologically determined. This is pop psychology masquerading as horrible biology.

    1. There is no shortage of examination of the quality-quantity feedback loop in humans in modern times. There is a lack of evidence concerning the trade-off in the Malthusian era. Schultz provides a nice summary of the evidence. As for whether the trade-off is heritable, I’m not aware of any direct evidence, but given the continual findings of human preferences having a heritable component, I doubt that preferences concerning child rearing are an exception.

      Parents have always made an investment in educating their children – from how to hunt, to how to grow a crop, to basic literacy and numeracy. Upper classes have been outsourcing education for thousands of years. There is no shortage of time for selection effects to have acted.

      Having said this, I don’t believe that this mechanism triggered the Industrial Revolution. Rather, as I stated in my post, the underlying genetic factors concerned inherent quality. There is ample evidence of the heritability of IQ, patience and a host of other economically relevant traits.

  3. Can’t all this be distilled down to the classical r-k factor? And wouldn’t it be more objective to use IQ instead of the more subjective term quality? Seems to me that IQ is measurable and would make a better gauge, as average IQ is so strongly linked to economic development. It seems logical that when average IQ drops in a society, the ability of that society to maintain technology is diminished, and this may be the first steps toward a return to the Malthusian existence.

    1. I like to use the term quality as I think there are plenty of economically relevant traits. While IQ may be the most important, patience, risk preference, propensity to violence etc are also relevant. However, I’d like to start being more specific as to the traits in some future models.

  4. What about assortative mating? Once a high-education, high-quality preference demographic exists, shouldn’t they mostly mate with their own kind? Also, what about the effects on households where one parent is from the quality preference group and the other is from the quantity-preference group? What is the result? You would have to do some research on such households. It would be a bit more complicated to adjust the model for that scenario, but my intuition suggests that it would produce a bimodal distribution in genotypes. Another question, is whether technological progress can be maintained by a small, high-quality group amidst a sea of low quality.

    Anyway, interesting idea, and it’s good to see attempts to quantitatively model things like this.

    1. One possible interpretation of the model is that assortive mating is occurring (just assume that each type mates with the same type and has twice the number of children as in the existing asexual model), so that will not change the result. Mixed mating with a diploid population could change the speed of the dynamics, but the end result will still be the same.

      Where I think these considerations could be particuarly interesting is if we introduce sexual differences. What happens when the female has a higher incentive to invest in quality (as is usually the case)?

      As for the issue of a small number of high-quality individuals in a sea of low-quality, I think that’s a vital issue (and very interesting too). What is more important – the mean, the median, the proportion above a certain threshold?

  5. I read the following article recently that may or may not be of interest to you (Jason).

    “Cognitive Capitalism : The Effect of Cognitive Ability on Wealth, as Mediated Through Scientific Achievement and Economic Freedom”
    DOI: 10.1177/0956797611407207
    Psychological Science 2011 22: 754 originally published online 2 May 2011
    Heiner Rindermann and James Thompson

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