Genetic diversity, economic development and policy
It has been a few months since I wrote most of my series of posts on Quamrul Ashraf and Oded Galor’s paper The ‘Out of Africa’ Hypothesis, Human Genetic Diversity, and Comparative Economic Development. This last post in the series is on the implication of their argument for policy.
As a recap, Ashraf and Galor showed a hump-shaped relationship between genetic diversity and economic development across countries and populations. They proposed that two opposing effects of genetic diversity cause this hump-shaped pattern: diversity promoting innovation and productivity through the greater range of traits available in the population, and negative effects through conflict between more dissimilar individuals. This pattern is reflected in African populations with high diversity and North American populations with low diversity experiencing lower levels of economic development than European populations with moderate levels of diversity.
Ashraf and Galor do not express any policy recommendations as flowing from their findings. The closest they come is a thought experiment where they note the effect of increasing diversity in Bolivia or decreasing diversity in Ethiopia. In an article in Chance (based on an earlier blog post), Andrew Gelman considered what this means:
What would it mean to increase Bolivia’s diversity by 1 percentage point? I assume that would mean adding some white people to the country. What kind of white person would go to Bolivia? Probably someone rich enough to increase the country’s income per capita. Hey, it works! What if some poor people from Ethiopia were taken to Bolivia? They’d increase the country’s ethnic diversity too, but I don’t see them increasing its per-capita income by 41%. But that’s okay; nobody’s suggesting filling Bolivia with poor Africans.
What about Ethiopia? How do you make it less diverse? I guess you’d have to break it up into a bunch of little countries, each of which is ethnically pure. Is that possible? I don’t actually know. If you can’t do that, you’d need to throw in lots of people with less genetic diversity. Maybe, hmmm, I dunno, a bunch of whites or Asians? What sort of whites or Asians might go to Ethiopia? Not the poorest ones, certainly. Why would they want to go to a poor country in the first place? Maybe some middle-income or rich ones (if the country could be safe enough, or if there’s a sense there’s money to be made). And, there you go; per-capita income goes up again.
Moving people around in the way Gelman considers is different from a situation where the founder effect shaped genetic diversity (the founder effect is the reduction in diversity that occurs when a small proportion of a population migrates and takes only a subset of the genetic diversity of the population with them). If a group of rich whites moved to Bolivia, they might increase the level of genetic diversity, but they would also be of substantial genetic distance from the Bolivians. Spolaore and Wacziarg argued that genetic distance causes differences in economic development as it acts as a barrier to technological diffusion, either through the genetic distance itself or other characteristics for which genetic diversity is a proxy. If the new sub-population in Bolivia pushed out the technological frontier through their activities, the genetic distance between them and other sub-populations may prevent technological diffusion and prevent the benefits from accruing across the country.
We can also consider this mix from the perspective of relatedness, which is how Ashraf and Galor frame the problem. Each of the whites and native Bolivians would have lower relatedness with each other than with their someone from their own sub-population. This might increase the negative effects of diversity more strongly than it would introduce any positive effects, as differences in relatedness between some people would be greater than in an equally diverse population shaped purely by the founder effect.
Then there is the question of interaction between people of different races. There is considerable evidence of racial conflict, whereas the evidence for the human ability to detect small genetic differences in relatedness as Ashraf and Galor propose is weak.
Apart from Gelman’s suggestion, Ashraf and Galor’s paper does not immediately lend to other genetic-focused policy interventions. But this is not to say that their findings are useless in determining policy. For example, if Ethiopians populations could be highly productive due to their diversity, but this is negated by excessive intra-population conflict, we might ask what interventions could reduce conflict. Similarly for Bolivia, if the lack of diversity hinders expansion of the productive frontier, could Bolivia benefit from technological imports?
As I’ve posted about before, I am skeptical of Ashraf and Galor’s hypothesis, so I’m not sure these policy suggestions would work. But if the hypothesis is right, there is scope for it to shape policy. As Goldberger and Manski failed to see in their criticism of the use of genoeconomics in policy development, just because there is a genetic factor underlying an observed outcome does not mean that we need to implement eugenic policies or throw away non-genetic policy interventions.
My posts on Ashraf and Galor’s paper on genetic diversity and economic growth are as follows:
Is population density a good measure of technological progress?
What are the policy implications of the effects of genetic diversity on economic development? (this post)
Other debate on this paper can also be found here, here, here and here.