At the start of the concluding chapter in Gad Saad’s The Evolutionary Bases of Consumption (review coming soon), Saad quotes Kenrick and Simpson as follows:

Nisbett introduced the series [on evolution and social cognition at the University of Michigan] by saying that he once thought every psychology department would need to hire an evolutionary psychologist, but he had changed his mind. Instead, Nisbett predicted that evolutionary theory will come to play the same role in psychology as it currently assumes in biology: “Not every psychologist will be an evolutionary psychologist, but every psychologist will be aware of the perspective and will have to address its explanations and constraints in his or her own work” (Nisbett, 1995, personal communication).

I have similar thoughts about biology in economics. If, in 20 years time, there is a small but active research field at the intersection of economics and evolutionary biology, I will be disappointed. Rather, all economists should have the tools to assess whether evolutionary biology is relevant to their work. A unit or two in biology and evolutionary theory should form the basis of early economics education. Only then will economists have the required tools at their disposal.

Sam Bowles and Herb Gintis have an interesting reputation within the fields of economics and evolutionary biology. The recent paper of Nowak and colleagues has given Bowles and Gintis some competition as the most prominent advocates of a group selectionist approach (or multi-level selection as Nowak and colleagues would term it), but I still have not come across anyone in evolutionary biology who will argue for the importance group selection to the extent they will (as this video of Herb Gintis demonstrates).

A Cooperative Species: Human Reciprocity and Its Evolution continues Bowles and Gintis’s group selection approach to the evolution of cooperation, with many of their earlier papers forming the basis for chapters or models.

The opening chapters are excellent as they tour the findings of experiments into cooperation (particularly dictator games and the prisoner’s dilemma). They argue that these present strong evidence that people undertake actions that are costly to themselves, and they address most of the typical criticisms of the experiments and the interpretations. While I did not always agree, their discussion is thorough and builds a strong argument. In particular, their discussion of whether people could distinguish between experiments and real world situations is well covered, with Bowles and Gintis arguing that people are aware that most experiments are single shot games.

Once we move from the experimental to the theoretical, the remainder of the book is more an exploration of evolutionary game theory models involving cooperation than an attempt to describe the evolution of cooperation. In many ways, I found this approach frustrating. For example, when examining the feasibility of the evolution of cooperation through inclusive fitness, they developed a model in which slight error rates in recognising whether someone was cooperating or not prevented cooperative traits from evolving. They then continually referenced this model as showing that cooperation could not evolve without group selection. That a single theoretical model can form the basis of such a claim, without seriously considering the broad literature and range of models in which it is argued that cooperation can evolve, leaves the argument short. Similarly, they constructed some very complicated game theory models and suggested they were too complicated for mere mortals as there were infinite equilibria.

As a test for these arguments, you might ask whether a generally cooperative approach leads to higher benefits or costs in modern society. It would seem the benefits are huge, with more cooperative people (also having higher IQ and patience) obtaining significant dividends. Even if you make the odd mistake, cooperation appears optimal for purely selfish reasons. If my error rate is so costly and my ability to coordinate with others is so difficult, as Bowles and Gintis imply, why do I find cooperation so rewarding?

At times their points were important. For example, Bowles and Gintis argued that while signalling theory tells you that agents will engage in costly activities to signal, their group selection argument provides a basis for why the signals are “positive” in the sense that people engage in costly cooperation, rather than simply beating the weaker person up. But, by this stage of the book, their dismissal of reciprocal altruism and inclusive fitness has left the obvious answer unavailable.

Their models of group selection are interesting, although hard work. They use an agent based approach, which is useful, but such models are hard to assess without playing with the models and the parameters yourself. Each chapter feels more like an academic paper than book chapter, which had me skimming much of the maths with occasional stops at interesting points.

One of the pillars to their claim that group selection was vital to the evolution of cooperation is that intergroup conflict was frequent and that groups regularly wiped each other out. They survey the evidence for group conflict and suggest that the frequency and severity of war created the intergroup selection pressures necessary for group selection to operate. I tend to agree with the evidence they present concerning war, but the evidence presented by Napoleon Chagnon, among others, suggests that war also has significant individual benefits.

Ultimately, the book’s weakness is the lack of time that is spent addressing models of the evolution of cooperation that do not rely on group selection. If the focus given to defending the experimental evidence was also given to to alternative models of the evolution of cooperation, the book may have delivered some serious arguments. In their absence, I am not sure this book will convince anyone to change their mind.

In my recent post on whether children are normal goods (demand for children increasing with income), I dodged questions around the effect of education. Most recent studies into the effect of income on children control for the level of education, as did Bryan Caplan in his analysis that found a positive correlation between income and children in the United States.

I am torn over whether controlling for education gives us meaningful information. Education clearly has a negative effect on fertility. Education takes time, which reduces the time available for children. However, education increases income. If education is simply an investment of time to earn income in the same way that labour is, then maybe we should not control for it in determining the effect of income on number of children. Rather, we should combine the education and labour time and examine the opportunity cost and effects of the entire investment.

Of course, education serves purposes other than increasing income. It is a signal in itself. But this only raises the question of why someone would undertake this costly education to obtain income or send a signal, which is in turn used to attract a mate, when the ultimate effect is less children.

In part, we need to consider that mating markets are two-sided. While the man might increase his marketability through education, the market in which he then shops is full of educated women who are strongly affected by the time expended on education. There is also the issue of the timing of income, with many years of student life preceding the income boost. By the time the income arrives, the eligible partners are older. But why then would these potential partners not assess their mate’s expected income? Is there too much uncertainty?

Ultimately, an evolutionary perspective does not hand you the answer on a plate. Humans are now exposed to an environment so far from their environment of evolutionary adaptedness that many of our actions can only be considered sub-optimal from the crude perspective of biological fitness. The rationale for the investment in education will likely have evolutionary elements, such as acquisition of resources and signalling to mates and allies, but the motivations driving those actions do not deliver fitness benefits like they once did. The proximate objective of attracting a high quality mate does not guarantee the ultimate objective.

Group selection advocates often describe how human cooperation could only have evolved through competition between groups. I have wondered how these advocates view modern day group competition, particularly in the form of tribalism and patriotism. Should we continue to engage in group competition to allow cooperation to flourish?

This article by David Sloan Wilson gives one perspective. Some of the more interesting quotes:

Even small groups can become dysfunctional (i.e., fail to “constitute themselves”) if the analogs of patriotism and civic duty are absent. If members of a small group do not perceive themselves as a group with a common purpose with obligations enforceable by punishment, then they will fall apart as surely as a nation. …

[S]mall groups are essential building blocks of large-scale society. We are genetically adapted to function in small groups of individuals who know, like, and trust each other and who hold each other accountable for their actions. Multicellular organisms can’t be healthy unless their cells are healthy, and large-scale human society requires healthy “cells” of small groups responsible for managing their own affairs. …

If we want America to function as an adaptive social entity, we need to adopt it as our group identity, carry out its obligations, and make sure that other Americans do also. In addition, the iron law of multilevel selection states unequivocally that if America pursues its self-interest too narrowly, then its actions will undermine adaptation at larger scales. The truest American patriot works to make America a solid citizen of the global village; nothing less will do.

Despite my ambition to see evolutionary biology incorporated into economic and policy thinking, the last paragraph is a good reminder that, even from the same framework, it is possible to come to vastly different answers.

From Michael Shermer’s review of Robert Frank’s The Darwin Economy:

[S]exual selection may very well account for most of characteristics that we so admire about our species: art, music, humor, literature, poetry, fashion, dance and, more generally, creativity and intelligence. Science itself may be a byproduct of the cognitive process of trying to impress others in order to gain status and mates by making breakthrough discoveries and formulating important new theories. …

Thus, contrary to what Frank argues, a viable case can be made that the evolutionary arms races he so detests—men’s suits, women’s high heels, McMansion homes, and elaborate coming of age parties—are products of a larger system that drives our species to be so successful. By carrying out the biological analogy into political economy, if anything we should be rewarding the most ostentatious displays of power, prestige, wealth, creativity, health, vigor and intelligence with tax breaks and even subsidies! At the very least one could argue that a consumption tax on the rich could very well backfire and reduce the reproductive success of our species by attenuating the creative productivity that has given us so much of our culture that we cherish.

Frank’s proposal of a consumption tax to curb conspicuous consumption does not change the relative ranking of the signallers. As Shermer notes, some signalling is socially optimal, but an arms race that does not change rank order is not. Signals are honest by virtue of their cost. By adding a cost in the form of the tax, a smaller signal will require as much creative effort and will be as hard to fake. The assortment based on signalling will continue.

So does the activity itself – the conspicuous consumption – have benefits through requiring innovation or creativity. It may be possible to make this argument if we assume that innovation occurs in the race to produce goods to consume. As Porsche adds new features to its car each year, or as Rolex develops more complex watches with higher precision (a precision far beyond that which any human cares), what are the spill over effects?

Then there is the question as to whether conspicuous consumption is actually sending the signals we are intending to send. As asked by Geoffrey Miller in Spent, are our consumption instincts tuned to our current environment? Are signals using our intelligence and creativity a forgotten but better signal of our qualities? Regardless of the tax, displays of intelligence and creativity will still be freely available.

While Shermer takes on Frank’s proposal to curb conspicuous consumption, unfortunately Shermer does not address some of the more pernicious effects of the competition for positional goods. In the introduction to his review, Shermer concedes he was relieved when helmets in cycling races were made compulsory. I would have liked to have heard his views on collective action problems such as competition for positional goods driving down worker demand for safety standards, instead of the softer target of the size of government.

However, Shermer’s focus on the size of government reveals the shortcoming in Frank’s pitch to libertarians. Frank does not want to decrease government spending or coercion. Throughout The Darwin Economy, Frank laments drops in government expenditure and the deteriorating social infrastructure that results.

A better pitch to libertarians would have involved a shift in the base of taxation, without associated increases. A consumption tax makes sense, with Milton Friedman among those who have conceded that it is a preferred way to raise money. A shift of the taxation base towards consumption, carbon, congestion and the like (Pigovian taxes anyone?) and away from labour and capital could appeal to libertarians. But by also suggesting we need more government expenditure, Frank has lost most libertarians’ interest and dropped us into the usual debate on whether government should be bigger or smaller. When Frank wants to change and shrink the basis of taxation, he might gain some libertarians’ interest.

There were some other interesting points to Shermer’s review. Shermer poses the argument that in considering the evolutionary features of the economy, we should be thinking of corporations as species. This reflects analysis by Paul Ormerod, who showed that extinction patterns of corporations were similar to that of species. Ormerod’s analysis provides an argument that there is more blind luck behind corporation success than skilful management.

This level of analysis provides some interesting outcomes, but using the corporation as the unit of analysis has limitations. If we want to understand why an investment bank behaves the way it does, should we look at the bank as a whole, or the actions of the highly incentivised individuals within it? In the same way, should we examine the actions of government by looking at government as a single entity, or are we better off analysing the incentives of those within it? Public choice theory has already provided the answer to that question.

As a final note, Shermer also pitches his long stated argument that both evolution and economics involve bottom up systems, and as a result, we should not feel the need for a top down economic designer. Shermer writes:

Robert Frank is not a socialist and yet the design conceit is there nonetheless. Even when gussied up in economic jargon with Darwinian overtones, hints of the totalitarian mind from millennia past creep into our thoughts and reach for the controls. …. It’s counterintuitive to think bottom up instead of top down. It is why so many people struggle to truly grasp the deep meaning of evolutionary theory, and it is why so many people fail to see that economic order is the product not of human design but of human action.

Just because something is a bottom up system does not imply that you cannot or do not want to have rules imposed from the top. What evolution show us is that bottom up systems do not always deliver good results, and as Shermer rightly notes, that top down design is fraught with difficulty. Looking at some of Shermer’s other writings, Shermer is not short of top down design wishes in his libertarian world:

• The rule of law.
• Property rights.
• Economic stability through a secure and trustworthy banking and monetary system.
• A reliable infrastructure and the freedom to move about the country.
• Mass education.
• A robust military for protection of our liberties from attacks by other states.
• A potent police for protection of our freedoms from attacks by other people within the state.
• A viable legislative system for establishing fair and just laws.
• An effective judicial system for the equitable enforcement of those fair and just laws.

While I generally agree with where Shermer draws the boundary, it is apparent that the question is not whether there should be top down interference in an economy, but rather what the nature of that interference should be.

I finished a post last week with the question of whether children are normal goods. Below I want to lay out some economic arguments on this, before putting in an evolutionary twist that raises the question of whether we can rely on any of the economic analysis.

A normal good is a good for which demand increases with income. Cars, holidays and jewellery are examples of normal goods. The opposite is an inferior good, with demand decreasing as income rises. An example of an inferior good might be hamburger mince (as people move to steak) or other low-quality products. This change in demand for a good in response to changing income is known as an income effect.

There has been some debate over the years about whether children are normal goods, particularly given the ubiquitous pattern of fertility declining as a country’s residents get richer. However, determining whether children are a normal good is complicated, as we do not get to witness a simple increase in income without other conflating factors.

First, income is not the major input into children. Rather, time is the scarce resource, with that time balanced (crudely) between work, leisure and children. Gary Becker argued back in 1965 that using time was the right way to frame the problem.

Consider a sudden increase in your wage. This increases the relative price of leisure and children and would result in someone wanting to work more and to demand less children and leisure. This is known as a substitution effect. The income effect means that the worker does not need to work as much for the same income. This increase in income increases the time effectively available, and if children are a normal good, a person will have more of them. However, the substitution and income effects operate in opposite directions, making it difficult to determine whether that person will actually have more children. If we see them reducing the number of children they have, we cannot determine the direction of the income effect and whether children are a normal good.

Accordingly, the decline in fertility with wealth witnessed at a country level suggests that the substitution effect is strong and that the income effect, which would be operating in the opposite direction if children are a normal good, does not outweigh it. However, it also leaves open the possibility that children are an inferior good, with both the substitution and income effects contributing to the decline.

Betsey Stevenson made a similar point concerning the need to consider the income and substitution effects in Cato Unbound last year when discussing a drop in the price of children. Stevenson argued that children might be a Giffen good, a type of inferior good for which the income effect is so strong that not only does it counteract the substitution effect, but actually completely outweighs it. If children were a Giffen good, a decrease in the price of children (through decreasing time requirements to raise them) would lead you to consume less.

As a Giffen good must be an inferior good, and not a normal good, Stevenson’s question turned into a debate on whether children are normal goods. Bryan Caplan ran some regressions on General Social Survey data from the United States, and found that once you control for IQ and education, the number of children increases with income. That pattern holds for both men and women. As the price of children and leisure goes up through an increase in income, there is a substitution effect away from children and leisure and towards working. If children are normal goods, there is an income effect to spend more on children. As income has a positive effect on the number of children in Caplan’s analysis, children must be normal goods.

Justin Wolfers came back with an argument that children were inferior goods, largely based on the observation of cross-country fertility declining with income, but it misses the combination of the income and substitution effects discussed above.

A major difference between Caplan and Wolfer’s analyses is that Caplan controls for education. That complicates matters further, and will be a subject of a separate post. There is also the question of whether children are a Veblen good, which means that as the price of children rises, the preference for children also increases as children become a status signal. If the fundamental nature of the product changes, it is even more difficult to unravel. Another post to come for that too.

Now for the evolutionary spanner in the works. Children are a decision of two people. A man must convince a woman, and vice versa, to have a child. Parental investment theory tells us that the man will be doing more of the convincing, but both sides are not free of constraints.

If a man has more children as his income increases, it may be a result of a change in his demand for children as his income increases. Alternatively, it may be due to a change in the constraint that he faces. In other words, suppose men all want the same number of children regardless of income, but women will only mate with higher income men. As a result, we will see a positive relationship between income and children. This is even though we assumed that children are not a normal good.

As women are less constrained, their changing behaviour may be more representative of their preferences, but they are not completely independent. Woman are constrained in the quality (and income) of men that they can attract, and that may affect their willingness to have children. To the extent that their income is representative of traits desired by men, increasing children with female income (as in Caplan’s regressions) may be evidence of lower constraints rather than a response to their own income.

I should note that there are plenty of studies seeking to assess whether children are normal goods. They use all sorts of external shocks, such as the man losing his job or shocks to male income through a resources boom. The evolutionary problem remains. If a man loses his job, he is more likely to run into the female constraint. Unemployment is a strong predictor of divorce.

Is there an experiment in which you can separate male preferences from the constraint?

Diane Coyle has noted the release of three new books on the evolution of cooperation: Wired for Culture by Mark Pagel, Beyond Human Nature by Jesse Prinz and Together by Richard Sennett. Each was reviewed by Robin McKie in the Guardian

A quick glance at some reviews, such as this by Julian Baggini, suggests that evolution is at the heart of Pagel’s discussion of the development of culture, with a fundamental question being how does human culture affect transmission of genes. In a review in the Telegraph, Tom Chivers pitches Pagel’s book as a response to Dawkins and a corollary to Steven Pinker:

[T]he book could be read as a corollary to Steven Pinker, whose ironically titled The Blank Slate showed that the human mind was anything but – that learning is hugely directed by genes. Pagel says that while that is true of many things, such as language, when it comes to culture, our minds are indeed blank at birth – a Polynesian baby adopted by Westerners would grow up as a Westerner, without any yearning to build an outrigger canoe.

While I am not convinced of the outrigger example – replace outrigger with car and there will be some strong similarities between who in the two cultures are interested – the book definitely seems worth a read.

I am not as keen to read the book by Prinz. McKie quotes Prinz as saying that:

The vast majority of human behaviours – from pub fights to mental illness – vary in form and frequency from culture to culture. “Our actions are not ingrained,” he states.

This excerpt from the Amazon review is of a similar vein:

In this provocative, revelatory tour de force, Jesse Prinz reveals how the cultures we live in – not biology – determine how we think and feel. … He is not interested in finding universal laws but, rather, in understanding, explaining and celebrating our differences.

There is a case to be made for the power of situation and culture, as shown in Zimbardo’s The Lucifer Effect or evidenced through the decline in violence observed by Pinker, but is there a human culture where pub fights (or their equivalents) are not predominantly the domain of young males? Can any focus on the differences completely ignore the universals?

I also came across the following review in The Age by Nick Miller. Miller interviewed Geoffrey Miller for some context:

[G]enetic differences account for about 50 per cent of the difference in general intelligence between children. This actually increases to 80 per cent by old age, Miller says, because higher intelligence tends to reinforce itself by driving inquiry but low intelligence will lead us to “watch reality TV, not read books and go to NASCAR races”. …

“I think the important thing is for parents to recognise that they aren’t at fault [if they happen to] raise a psychopath – though they might have been at fault in choosing the wrong mate,” Miller says. But should this inspire despair? Doesn’t it mean we can’t improve our kids, that the die is set?

“If you’re single, it’s great news,” he says. You just need to choose the right mate. It also means parents can relax: “You feed them and they will grow … you’re not going to be able to change their basic intelligence or personality very much.”

It even has implications for the education system. “I think the US is wasting hundreds of billions of dollars a year trying to give university educations to young people who can’t actually handle university,” Miller says.

Those are two very Bryan Caplan like arguments (with which I agree).

Prinz responds:

“I think the claims being made are often irresponsible and dangerously so,” he says. “If you really thought there were biologically based differences in intelligence, the thing you should promote is IQ enhancement through education, because this would equalise the differences.”

Prinz goes on to attack twin studies as a tool to assess heritability and argues, in contrast to the evidence with which I am familiar, that parents have a huge effect on outcomes:

“Parents are, in the early years of life, the most important factor in determining intelligence outcomes, because they have so much control over a child’s environment,” Prinz says. “Parents [should] give their children challenging problems, convey an excitement about learning by modelling that enthusiasm, put a child in contact with materials of instruction that are stimulating.”

I try to read a good dose of books that run counter to my understanding of issues, but like to choose the best available. Is Beyond Human Nature worth the effort?

As happens occasionally, I have just come across an article that I should have seen years ago. In an article titled Natural Selection on Male Wealth in Humans, Daniel Nettle and Thomas Pollet look at data from a variety of societies, ranging from subsistence groups to industrialised societies, and show that the link between male income and reproductive success is strong and ubiquitous.

In their main analysis, they use longitudinal data for a group of British men born in a single week in March 1958. These men were tracked through to age 46. With around 96 per cent of reproduction for men occurring before this age, the number of children at this age provides a good guide to reproductive success.

Among the men in the sample, the effect of male income on reproductive success was positive, with a selection gradient of 0.10. This means that for every standard deviation increase in income, there is a 0.1 standard deviation increase in reproductive success. This may not sound like a lot, but it is strong selection compared to that observed in many other species. This effect was mostly driven by whether people had any children or not, rather than through variation in family size.

The authors also controlled for education by splitting men into three separate education groups (which has a negative effect on fertility for both men and women), which tended to strengthen the observed effect of income.

Where we see even stronger selection, however, is in the historical data. Nettle and Pollet took their results and compared them to selection gradients calculated from a range of other papers. They found that for contemporary United States and Sweden, English testators in 1540 to 1850, Norwegian farmers in 1700 to 1900, and a range of pastoral and hunter-gatherer groups, there was a positive selection gradient based on male wealth or hunting ability.

Further, while the strength of selection in the three contemporary societies was similar to each other, it was lower than in the pre-Industrial societies. The authors suggested that this weakened pressure was largely due to an increase in the level of monogamy and reduced variation in effective family size, rather than changing preferences for income. As the authors note however, while weakened, the selection in modern societies is still significant.

An underlying question to these results is whether the selection of phenotypic features (income) has any relationship to underlying genetic qualities. Both income, and many of the factors underlying income, such as IQ, have been found to be heritable, so there is likely to be evolutionary changes to the composition of the population.

The other question is why is there this link. The most obvious explanation is that women prefer men with more resources, both for the resources themselves and for the fact that they signal quality. That the effect of income was largely related to whether someone had zero or more children, rather than size of family, might be suggestive of this. To have more than zero children, you need to attract a mate. However, while doubting the idea, the authors did not rule out an explanation that men who have children earn more to support them.

Economists might try to pin this relationship down to the decisions of the male with higher income. If children are normal goods, a man should want to buy more as their income goes up. There is a range of issues with this argument, and I am going to address them in a post next week.

After copping some criticism for his comments on the coverage of female contraception in health insurance, Steven Landsburg has noted that some arguments in its favour may have merit. Two of the more interesting he notes are as follows:

We might not want to discourage parenthood in general, but surely we want to discourage parenthood by the sort of woman who won’t use contraception unless it’s subsidised. Ideally we’d tax childbirth among that class of women, but since they’re hard to identify, the best available policy is to subsidize contraception.

We might not want to discourage parenthood in general, but surely we want to discourage unwanted parenthood, because unwanted babies are far less socially valuable than wanted babies.

On the first argument, Landsburg is not convinced that the primary group who will change their behaviour are the poor or the dumb, or that we do not want them reproducing. However, he notes the second, which in some ways reflects the Levitt-Donohue abortion-crime theory, is an argument worth taking seriously. The two arguments are quite similar, however, as while Levitt and Donohue explained the abortion-crime effect in terms of unwanted parenthood, the theory is often quoted in the context of what type of people had the abortions.

However, what struck me about these arguments is that they are representative of an increasing tendency for discussions about tax or family policy, contraception and immigration to refer to the effects on the composition of the next generation. On the one hand, I find the subject interesting and have blogged about it before. On the other, if government started to actively consider factors such as these, I can only imagine the unintended consequences.

Consider a country, with population average IQ of 100, that opens its borders and the population doubles as people with a average IQ of 80 enter from a neighbouring country. The populations of the United States and United Kingdom have average IQs around 100, while the populations of countries such as India and Central America have average IQs around 80. There is generally more than an order of magnitude difference in per capita GDP between the populations with 80 IQ and 100 IQ.

Following the opening of their borders, the average IQ of the population of the open borders country has dropped to 90. Country populations with estimated average IQs around that range include Greece, Turkey and Croatia. These countries have a GDP per capita of roughly 1/3 of the United States.

Will the GDP per capita of the open borders country move to a similar level of GDP per capita as other 90 IQ countries? Could we craft an argument that the existing institutions of the 100 IQ country would protect it? What would distinguish this country in the long run from other 90 IQ countries? If the per capita GDP will plunge, should immigration be restricted to high IQ people?

These sort of question often attracts eugenics insinuations, as in a post titled Economics, Immigration and Eugenics by Will Wilkinson. Wilkinson raises the eugenic views of many prominent (and “progressive”) economists in the early 20th century, and quotes Thomas Leonard, who wrote:

Irving Fisher [a very important figure in the development of 20th century economics] said in his presidential address to the Eugenics Research Association, “I should, as an economist, be inclined to the view that unrestricted immigration . . . is economically advantageous to the country as a whole . . . .” But, cautioned Fisher, “the core of the problem of immigration is . . . one of race and eugenics,” the problem of the Anglo-Saxon racial stock being overwhelmed by racially inferior “defectives, delinquents and dependents.”

Wilkinson then asks:

[W]hat would a latter-day Irving Fisher, with access to the best and latest science, say about immigration? I’d guess he’d be a big enthusiast for offering visas and citizenship to high-IQ, high-skill foreigners. But what about poorer, low-skill workers? I’m not so sure.

Wilkinson threw to Garett Jones for comment, who answered Wilkinson’s question in the following series of tweets:

High human capital immigrants are likely better voters, better savers, more Coasian.

& for incompletely understood reasons, human capital differences persist across generations & across immigrant groups..

…so an atheoretical forecaster would bet high IQ immigrants would probably yield a bigger long run social surplus…

…while lower IQ immigrants have to yield a Ricardian benefit > negative political externalities to raise surplus.

This argument reflects previous points made by Jones, such as in this paper in the Asian Development review (pdf). The paper provides a great summary of how IQ affects productivity and economic growth and deals nicely with some old chestnuts about the validity and usefulness of IQ testing.

Two factors that Jones did not directly mention in his tweet were that high IQ people tend to be more cooperative and trusting (and trustworthy), and that skill complementarities may be important in fragile, high-value production technologies.

Applying these points to the above thought experiment with the open borders country, what are the policy effects through voting of a lower IQ population (although this is possibly the easiest solved through allocation of voting rights)? How do social interactions and institutions change if there are more untrusting and untrustworthy people?

One factor in answering these questions might be the distribution of IQ in the new population. Assuming the population of each group before the immigration event was normally distributed, the new population would have more high IQ individuals (say, above 115 IQ) and more low IQ individuals (say, below 75 IQ) than you would expect in a typical population of average 90 IQ. This dispersion might decrease over time, but if mating is assortive, it could persist. If per capita income is highly dependent on the productivity of the best and brightest, the presence of a significant proportion of the population with high IQ could keep incomes high. If a small proportion of low-IQ individuals damages social trust, the immigration could have negative consequences beyond that expected in a typical country with average population IQ of 90.

I am not sure where the balance between Ricardian benefits and negative externalities from low-IQ immigration lies. The large changes in per capita income associated with changes in average population IQ suggests that this is not simply a case of economic growth edging down with lower productivity workers, but rather that there may be sharp changes in productivity where political and social institutions change, or where complex production processes become infeasible. Low income in developing countries is often explained as a result of poor institutions, but to what extent are those institutions endogenous to the country’s population? These potential externalities tend to be ignored in most stories of the Ricardian benefits of immigration.