The Reversal of the Latitude-Income Correlation

It’s well known that GDP per capita increases with distance from the equator and it does so moving both North and South. (I discuss this correlation at MRU in Geography and Development, Disease (video)). Dietz Vollrathat at the Growth and Development Blog points us to a new paper by Holger Strulik and Carl-Johan Dalgaard that shows that development used to be greater nearer the equator. Here’s the big picture.

The top panel shows that as absolute latitude (distance from the equator) increases today so does development, here measured as the urbanization rate. The left panel shows the world. The right panel shows, rather remarkably, that the relationship continues to hold in Europe.  The bottom panel shows that as absolute latitude increased in 1500 development, here measured as population density, decreased both in the world and Europe.

LatitudeIncome

What can account for this relationship and its reversal? The authors have a let’s say highly speculative (but very interesting!) theory. It runs as follows. Animals and people get bigger in colder climates possibly because surface area to volume decreases with size so larger animals can retain heat more easily. All else the same, however, bigger people means fewer people and so in the pre-industrial era higher latitudes had smaller populations leading to less innovation (ala my TED talk on market size and innovation). But fewer children also meant more investment in human capital per child (a Beckerian quality-quantity tradeoff). Higher human capital per child leads to increases in technology which allow and encourage even more human capital accumulation and fewer but yet even higher quality children and thus you hit a takeoff point where the economies of the colder regions accelerate generating the modern relationship.

Phew! Now that’s a theory. I don’t say that I believe it but I applaud the ambition. Bravo!

What alternative theories do MR readers propose?

Comments

I see that environmental determinism is alive and well.

Economists aren't good with subtlety. "Cold weather make people strong" is rather fitting with Prof. Tabarrok's steal trap of a mind.

It seems like it would behoove you to use the proper idiom when insulting someone's intelligence...

Well, it would be foolish to proclaim that environment has no significant impact on economy, more so when the pre-industrial times are being debated as well.

It's not a "reversal," it's a fairly steady progress northward over the last 5,000 years:

"The most productive centers of cultural innovation have tended to move north over the millennia, for example, from the Fertile Crescent to Ancient Greece to Renaissance Northern Italy to Enlightenment Northern Europe. [Michael] Hart attributes this to agriculture tending to arise first in low-to-medium latitude locations with long growing seasons then spreading northward. In hunter-gatherer economies, every man must hunt. But in farming economies, enough food can be produced to support urban sophisticates."

http://www.vdare.com/articles/a-real-diamond-michael-harts-understanding-human-history

Yes, Reykjavik, your day in the sun is just around the corner!

Finland was the back of the beyond until quite recently. If you'd told Alexander Graham Bell that the world leader in telephone design and production at the end of the 20th Century was going to be Finland, he might have had a hard time remembering where Finland was.

Not only that, but many 19th-century "racial science" enthusiasts classified the Saami as the world's most primitive, degenerate ethnic group.

Cue race and IQ debate in five, four, three ...

Icelandic, Chilean and South-African people are the smartest in the world? Huuum No.

South Africa is at about the same absolute latitude as North Africa.

You seem to lack even a basic understanding of geography or genetics. Do you even know where South Africa is on a map?

Latitudes of Cape Town and Tunis are about 34 degrees south and 34 degrees north.

Dare we speak about the Neanderthal correlation?

That article reads more like a piece of fiction from a novel than a news article.

It is a piece of fiction

That's a nice super-short story, a 21st century twist on a theme of several science fiction short stories; I'm not sure which one came first but it might've been Gerald Kersh's "Men Without Bones" (Harlan Ellison wrote a similar story but I think his was later). Explorers or researchers discover to their horror and disgust that modern human beings are not human after all but descended from Martians or other aliens, who took over from the proto-humans.
http://en.wikipedia.org/wiki/Men_Without_Bones

It is a topic researchers fear to tread.

From general introgression data between neanderthal and modern human populations from Sankararaman,

http://dienekes.blogspot.com/2014/01/neandertal-admixture-in-modern-humans.html

Back of the envelope analysis by substituting in the relevant OECD PISA scores,

Analysis for 10 cases

Correlation Matrix:

math12 1.0000

pct 0.7337 1.0000

Variable math12 pct

Regression Equation for math12:

math12 = 413.2 pct -10.7802

Significance test for prediction of math12

Mult-R R-Squared SEest F(1,8) prob (F)

0.7337 0.5383 53.1797 9.3275 0.0157

The prob (F) value of 0.0157 is quite significant.

However, this does not constitute proof because of there is no concrete casuality, small data size and many assumptions used. Further research is needed.

I'm not an Economic historian, but I'd presume that "pre-industrial" GDP was heavily weighted towards agriculture (rather than say industry). I'd presume being able to grow things all year helps on that front. So that explains the "pre" distribution.

For the post, you could probably spin a story about comparative advantage (equatorial stay focused on agriculture, rest more focused on industry) coupled with technological change that accelerated industry letting those regions jump ahead. That's probably BS though.

Bingo on pre-1500. The authors' theory that human size drives development is bizarre. Clearly the growing season is the driver.

Post-1500, you can look to the classic theories of why northern Europe outperformed. Growing season might still be relevant here, seeing as how development is defined by urbanization, not GDP per capita. I would guess that the productivity of Mediterranean agriculture contributes to a larger rural population. Older theories of economic history are also probably relevant here.

I'll also reference Raymond Crotty, since he isn't mentioned enough (learned of him through a Sailer blog post a while back). The argument being that, within Europe, lactose-tolerant peoples of northern Europe were set up to focus more on capital investment than lactose-intolerant peoples of the south. Sounds somewhat bizarre, but his book is interesting.

The pre-industrial agriculture advantage seems obvious.

Is a post-industrial explanation even needed? How many truly independent data points are there in those graphs? The industrial revolution started in Northern Europe. It spread to places where Northern Europeans had settled (mainly in similar climates), and they created empires that extracted wealth out of other regions. This was arguably all one interconnected phenomenon. Is there something peculiar about high latitudes that enabled it, or did it just happen to start there?

"It spread to places where Northern Europeans had settled (mainly in similar climates), "

High latitude areas had lower population densities, so Northern European's tended to settle in those areas and were a dominant culture and population group going forward. Any Europeans moving into low latitude areas were generally a fraction of the population.

In other words, it's not so much that Northern Europeans settled into only colder climates, but more that they tended to be a much larger share of the population in the colder climate regions.

Northern Europeans tried to settle in Panama and India as well, but they died like flies from the local endemic diseases. On the other hand, they were very successful in hot and sunny Australia.

@dan1111
I have my own peculiar theory of world history driven by geographical determinism. Since people are the same on average, what varies between regions is geography so essentially history is driven by geography. I think your explanation is mostly correct, indeed, northern countries are more developed due to historical fact that that's where modern economic growth started. I think that industrial revolution could have started in Spain or Northern Italy though before the UK, maybe in the middle east, it's mostly historical accident that lead to the industrial revolution in the way it happened. In Holland population I think was a bit too small (too few people, too few ideas to turn into innovations) which explains why it was so rich in the 17th century but why it didn't lead to modern growth.

Something like this, although I'm not sure if it is exactly comparative advantage. Also the Y-axis is "log urbanisation rate", not GDP. But productive agriculture produces a surplus for city-dwellers to eat.

Acemoglu & Robinson note this reversal in "Why Nations Fail". They explain the Americas as follows: the Conquistadors got there first and took all the bits with high population densities and become rich by turning the natives into serfs. Many of them already were serfs, subject to centralised native empires. Whites, both Spanish and English, tried this in places like the US and Argentina but there weren't enough potential serfs around. Plan B was to import white farmers from the Old Country; those guys then had lots of bargaining power, and could demand "inclusive institutions".

"white farmers from the Old Country; those guys then had lots of bargaining power, and could demand “inclusive institutions”."

What specifically is an "inclusive institution" and why did it lead to increased GDP per capita?

"Inclusive vs. extractive institutions" what the book was written to bang on about. In short, "inclusive institutions" means some approach to liberal democracy, including capitalism that is not too sewn up by cronies. I assume you agree that sort of thing leads to better GDP growth than the alternatives.

They are called inclusive because the broad mass of people can participate in the economy, because - for example - their property rights are respected. They claim that in the long term, political institutions must be inclusive too, in order that the people can hold on to such economic rights.

If by inclusive you essentially mean Northern European institutions, I agree. Are there any examples of pre-expansion inclusive institutions that expanded and were not Northern European?

Does Spain -> Argentina fit that mold? I'm aware that Argentina had relatively high gdp per capita during the 19th century, but it's relative status steadily dropped post 19th century.

"Inclusive institutions" in Acemoglu-speak tend to be used as a synonym for "successful" or "good." Acemoglu is not exactly a Popperian when it comes to writing history.

One explanation might be the introduction of a basic foodstuff, the potato, that grew well in climates far above where malaria flourished. With the introduction of that agricultural innovation all of a sudden northern Europe could support considerably higher populations, as marginal agricultural land was useful for more than herding. If you think about the population devastation that Ireland suffered during the potato famine, it is clear that, at least in the case of Ireland, a substantial fraction of the population was dependent on the potato by 1845.

I'm always a bit suspicious of one-cause explanations, like the notion that lead poisoning from their plumbing caused the decline of the Roman Empire.

While I'm not going to suggest it was the whole thing, adding a new staple crop like that can (and did) increase carrying capacity.

Right, the potato (I'm permanently scared of trying to spell the plural of potato ever since what happened to Dan Quayle) was a big deal. Combine it with the lactose tolerance mutation and Ireland could support a huge population (until the potato blight).

Yep, that sounds far more plausible. Better initial conditions end up balancing themselves out when you add enough time and mobility.

It's a bit like how Spain's success in the colonization of America ended up benefitting other European countries the most, as all the extra gold made Spain have very little interest in industrializing: Spain could get away with worse industry and governance but only until the silver ran out, and South America regained independence.

We can make similarly shaped arguments about California: It has inherent advantages that make it still be highly populated despite its government dysfunction.

Present population density: Italy 206.44/sq km vs Norway 15
The equator is still more developed! Hurrah!

Seriously, if your historical comparison is something that fails today, you probably shouldn't be using it.

Gdp per capita vs Gdp

Would you rather be poor and share space with 200 people or rich and have plenty of space?

Not to mention that's a real deceptive comparison, much of Norway is uninhabitable.

Norway is a bad example to use in any case, since it's substantially a rich oil country. A better question is how does Switzerland, Russia or China fit into this model?

So is a lot of Italy. The mountains in the middle cannot support much of a population. But Italy has several big cities, while Scandinavia does not.

Japan is a more extreme example. Almost completely mountainous, with a huge population crammed into the few flat spots.

Thank you for a good example. And the northernmost island, Hokkaidó, is almost unsettled until today.

Italy is quite densely populated and has been so, relatively speaking, for a couple of thousand years. That has advantages and disadvantages.

Colder climate produces less low hanging fruits (litterally) forcing agriculture and technological effort?
Colder climate forces higher competition for more scarce resources, forcing technological advancement thro war and applied science?
Colder climate and lower population force the creation of a state as a mean to create infrastructures to coordinate the defence effort, which in turn brings a more rational use of resource and over-production for accumulation for the bad years?
Colder climate actually makes food and resources accumulation easier?

And so on.

+1...To live up North you have produce and spend more resources to survive. And in the modern world, you have to other higher incomes to move to northern climates.

I suspect that intuition is bring driven by primarily considering caloric requirements due to the weather, but it does overlook the health detriments of living in warmer climates with higher disease burdens. I honestly am not versed enough to ferret out the relative magnitudes of those opposing consequences, but a naive model would seem to suggest there being a healthy middle ground where it's too cold to have high disease burdens but cold enough to fit into GC's theory.

I don't know much of anything about this, but I have heard it said that disease is pretty random and in pre-modern times it didn't make much difference what you did to ward it off, but cold is more or less responsive to effort and ingenuity.

For much of history, northern regions were very backward. Not just in Europe, in America as well. The place that is now Canada was never home to a large urban civilization - unlike Mexico or Peru (or even Cahokia).

The same holds about Patagonia and Siberia, BTW.

Indeed the current observation that the North is more developed than the warmer regions is, from the viewpoint of history, very anomalous.

As far as northern Europe goes, its heavier soils could not be farmed easily until better plows were devised in the early Middle Ages. That limited population growth, and also accounts for why the inhabitants kept trying to move south where the lands were easier to farm.

In North America the staple grain (maize) could not be grown in Canada for climate reasons. Even today most of the Canadian population lives in a narrow band along the US border.

If these explanations are true, they should have been truest in pre-industrial society, when scarce resources were relatively more important.

Tropical diseases are the historical cause. The control of most tropical diseases lead to a reversal.

Are there tropical diseases in Greece?

Is malaria a tropical disease?

Not really. In historical times malaria could be found as far north as St Petersburg (Russia not Florida). There were yellow fever epidemics in New York City in the late 1700s.
What we think of as tropical diseases became restricted to the tropics for economic reasons: northern countries are rich enough to undertake massive swamp drainage and anti-mosquito programs. Also, most of the population lives and works in well-screened, mosquito-free buildings, and if anyone does contract a serious insect-borne disease they are isolated in hospitals where the disease cannot spread.

It is not just malaria. In densely populated regions, diseases like smallpox spread fast.

Example: the Plague of Antonine probably finished off any chances of rebuilding the Roman Empire.

You may be thinking of the Plague of Justinian (540s). The Empire survived the Antonine Plague (which may have been smallpox, not bubonic plague) by centuries.

I would especially look at malaria. It still ravages Africa. It was present in Italy to the post war era. Also southern states which is why the CDC is in Georgia and makes a better explanation for the rise of the sunbelt than many others.

"and makes a better explanation for the rise of the sunbelt than many others"

Cheap air conditioning & water probably best describes the rise of the sunbelt. It was literally too hot & muggy to be very productive in a lot of the south east prior to the 1950's. And it was too hot and there was not enough water to be productive in the south west.

For some parts of the region (such as inland Florida), mosquito control was at least as important.

I think mosquitoes and disease are good explanation for a low population area. But I don't see why they necessarily lead to a low gdp/capita.

Tuberculosis used to kill 300 out of 100K Finns every year a century ago. Now is close to 0. People died a lot in all latitudes before modern medicine, tropical diseases is an euphemism for poor-people diseases.

Tropical diseases are the historical cause of what? Did they not exist 500 years ago?

Distance from the equator is correlated to temperature. In colder environment, people with long-term view and willingness to invest (sturdy homes, firewood, store food) are more likely pass on their genes. When Industrialization comes along, these traits are beneficial in this "new" world.

Additionally "economy" in pre-industrial world likely required sheer numbers of people to increase production, and higher latitudes didn't likely support the food needed for this number of people.

Not sure I'm putting forth anything new or different from collective thought that is out there on this topic.

Northern latitudes may have also had geographic pocket that enabled "industrialized" societies to evolve without being overrun by neighbors (Britain, Japan, Venice, protection by more mountain ranges, etc). Geography and economics are more tied together than most folks think.

"What can account for this relationship and its reversal?" Air conditioning.

My thought was similar. Were there changes in heating (or insulation) technology that made colder winters more bearable? When did heating with coal become more prevalent?

The Franklin stove (pre-coal) use was a significant productivity improvement alone. It takes a lot more wood to heat with an open fire place that it does with an enclosed stove.

One ramshackle theory might be that pre-industrial agriculture was both more productive and more labor-intensive close to the Equator than further away, hence very large populations in places like India relative to Europe. The reversal came with the Columbian Exchange, and greater development of capital intensity in temperate agriculture, which increased the returns to commerce and industrial production.

Closer to the equator but not too close. With the exception of the Andean civilization, none of the early civilizations were at the equator; most were located in the subtropical regions (and China in a decidedly temperate region). The Andean civilization is also the only one that arose in the southern hemisphere, though to be sure there's far less land mass in the southern hemsiphere

Perhaps the agricultural revolution decreased the threat of famine sufficiently to offset the threats of disease burdens such that large concentrations of populations grew and accumulated near the equator. (Thinking somewhat along the lines of the Plagues and Peoples book, 1976.) Pathogens and plants are generally exothermic - relying on ambient temperatures for their metabolic and growth rates. Urbanization acts as a multiplier on disease risk and pathogen loads. With early European industrialization populations moved into urban areas, increasing the risk of disease contagion. (Thinking now of Hawks et al paper on the rate of evolution during human history, as well as the history of disease transmission from the Old World to the New World.) So perhaps there are heavier disease burdens near equatorial regions today and perhaps in part those are due to recent attempts to increase urbanization and thus industrialization in those populations. On the bright side heading into the future the passage of time and the efforts of organizations like The Gates Foundation seem very likely to substantially reduce pathogen loads in much of the world around the lower latitudes. (Plagues and Peoples, by the way, is a book I'd suggest is one of those that can completely change a person's view of the world.)

I'm getting the feeling that a bunch of people got the claim backwards

Theory needs to take into account lingering effects of deglaciation and crustal rebound. Low-lying areas of Fennoscandia had only recently emerged from the Baltic; the area was described as an archipelago in Roman times.

I've read that there's a strong relationship between warm weather and 1) prevalence of warfare, and 2) spread of sickness. Perhaps proximity to the equator resulted in the deaths of too many would-be innovators.

I think that this theory has too many exceptions, like Vikings, the Inuit, Mongols and Russians. All very warlike cultures living in cold climate.

@MK - yeah but those peoples never amounted to anything until they settled down and became farmers with increased density. Conquest != (not equal to) innovation.

Not to mention the Black Death spread like wildfire not once but twice through temperate areas. Smallpox and several other epidemics also found cold climates no hindrance-- influenza still doesn't, in fact winter crowding indoors helps its spread.

It's evolutionary pressure of the time pressure discount rate.

In Norway, if you could not defer gratification in pre-industrial times and failed to plant and harvest on time, you starved to death. In Spain, you can find food in the winter. Manana is feasible in Spain, or Italy or Hawaii, but not in Finland. So it's natural selection's impact on economic time preferences.

However, deferred gratification becomes a very important determinant of success in an industrial society. That's the difference.

"time preference"

If it were purely "time preference" driven by climate, you'd expect competing North American civilizations. There were none. Nor were there any great civilization on the southern tip of South America (temperate climate zone), nor the southern Australian coast/New Zealand.

Well, the Mexica (Aztecs) developed their civilization in warmer latitudes, but high in the mountains, in a climate comparable to central Europe.

If the nations there weren't wiped by smallpox, measles and other contagious diseases against which they had no natural defenses, I would guess that the local civilisation would be very competitive - after some decades of adjustments. See: China, Japan etc.

"Well, the Mexica (Aztecs) developed their civilization in warmer latitudes, but high in the mountains, in a climate comparable to central Europe."

That description would fit the Inca's, not the Aztecs. The Aztecs were located in the tropical areas of Southern Mexico.

http://ecuip.lib.uchicago.edu/diglib/science/cultural_astronomy/images/culture_aztecmap.gif

The Incans were high in the mountains.
https://rowva-jh-hist.wikispaces.com/file/view/inca_empire.jpg/129564757/inca_empire.jpg

And I'm still skeptical, because a) neither the Aztecs nor Incans were that well advanced (I don't think they reached even Roman levels of 0 AD) and it still doesn't explain North America nor the Temperate zone of South America.

The Incas and Aztecs started later. Had civilization in the Americas been left interrupted for three millennia we would be better able to assess it.

Although accounts are limited, the Maori of NZ adapted well to the market economy after British colonization (at least when permitted access): http://www.teara.govt.nz/en/economic-history/page-2

This would support the time preference theory, no?

If Spain had population density of Norway, it would indeed be easy to find food in the winter there. But population density of Spain is much bigger - ergo, more hungry mouths for the available food. At the end of the day, the Malthusian effects kick in as well.

BTW How much work do the rural Finns do in the middle of harsh winter? I would guess - not very much. This is a mirror problem to the southerner's problem of scorching sun and unbearable heat during the height of the local summer.

The Renaissance, and in fact modern capitalism, actually arose in Italy. The di Medici and the other great mercantile families were perfectly able to defer gratification despite mild winters.
The shift from the Mediterranean to northern Europe is an accident of geography and history: the discovery of the New World and the opening of the sea route to the East shifted the center of trade from the Mediterranean (which became a backwater) to the North h Atlantic. The Atlantic fringe nations were in the right place at the right time to benefits-- and even so Germany lagged a good long while owing to political factors (including ruinous wars) while Scandinavia remained quite poor until the 20th century.
Proximity to the world's most lucrative trade routes is what came to matter.

The curse of natural resources.

But I'm confused. Figure 2 shows that development, as measured by population density, used to be higher in lower-magnitude latitudes. That's almost certainly still the case. The only thing that's changed is the development metric, which makes the strikingness of those figures a bit misleading. Why not bite the Maddison bullet and use GDP per capita for both time periods? And why does the title of this post refer to the latitude-income correlation as if that's what the paper did?

Winter. As fellow commenter Steven Kopits explained, if you live in a colder climate, you (as a culture) must learn to produce more than you can consume immediately -- i.e. prepare for winter. It doesn't take long to figure out that if you prepare even more, you can sell your surplus for money, or trade it, or use it to buy the loyalty of those less prepared.

Why wouldn't periodic droughts or monsoons produce similar effects? Or locusts, for that purpose?

The mid-latitudes are warmer, but the average temperature conceals many weather phenomena unfavorable to agriculture. Not everywhere is Canary Islands with their "eternal spring" climate.

Winter is very dangerous and it lasts for 3-6 months. The cold can kill you, the lack of food can kill you, the lack of fuel (wood) can kill you, the lack of clothing can kill you, etc.. We are blessed not to have to deal with that. Surely entire tribes pushed north were wiped out when winter came, or when they lost a battle with a rival just before or during winter, or if they had an injury or death of a key family member, etc. Nothing else is so dangerous to early human life.

You are thinking of North America or Russia. Much of western Europe has milder winters owing to the Gulf Stream.

For that matter wet-dry climates have a similar effect: you have to grow what you can and store it after the Nile floods or the Monsoon has watered the land, because for several months of the year the land will be a desert.

A+ for ignoring 3/4(at least) of my points.

I think the winter theory for increased IQ is strong and stands up relatively well to scrutiny. These wet-dry climates do not turn every mistake into death, they are more forgiving than that. It is simple, where we see higher population up until the industrial revolution (and maybe still) the environment is more forgiving, that's all we need to look at. Not sure what your angle is. A nurturist? They can't be convinced of anything, I don't know why I bother trying.

Why do you think Europeans dominate the productive world? Because of being bigots and racists?

Winter does not turn every mistake into death either, as long as you live in a society where you can depend on others to help out in emergencies-- which describes just all about all human beings apart from a tiny number of religious ascetics. Though you may have a point if you substitute "social cohesion" for "IQ". Even today the northernmost societies tend to be very close-knit with a "one for all, all for one" ethic (Scandinavia, to some extent Canada), sometimes shading over into xenophobia (Russia). You can make a point that colder climates enhance social bonds, thereby favoring civilization which requires mass numbers of people to cooperate with one another.

What if the causality is the inverse? Capitalism and services economy cause high rate of urbanization. Once you can afford to buy food and something to burn to keep warm from someone else, what's the point of living in the middle of nowhere freezing and working yourself from birth to death? Some people romanticize the countryside and farm life, but most prefer other kind of work.

I've had the view, at least in the US, that better people live in the North. I'm one who can't stand the likes of Phoenix, Los Angeles, Vegas, Miami -- People are known to be fake and conversations are un-inspiring.

The values instilled in cities like Chicago, NY, St. Louis lead to much better people. When it is below zero throughout winter in Chicago, we have nothing to do but stay inside and work on something exciting and produce. In Miami, I would be tanning everyday and enjoying staring at the hot girls.

As for the reversal, that I am quite clueless about but I would guess industrialization and the fact basic needs were finally available everywhere despite climate helps.

When it is below zero throughout winter in Chicago, we have nothing to do but stay inside and work on something exciting and produce.

Like homicides.

Vegas was started by gangsters and gets subsidized water. Artificial city, artificial culture so there's probably something to what you're saying.

NYC values LOL.

Well if values = GDP per capita, the poster has a point. But still air conditioning is probably a better explanation. Even most of the southern parts of the US are in the Temperate zone and have a well defined winter.

Interestingly, the relationship generally holds within countries as well. The northern USA is wealthier than the south; a number of European countries (Spain, Italy, France and Belgium) have a wealthier north and a poorer south. The former Yugoslavia shows consistent north-south disparities, between e.g. wealthy Slovenia in the north (28k GDP per capita PPP) and poor Macedonia in the south (12k). Some exceptions, though: southern England has always been richer than the north, even though the north was more industrialized; and southern Germany today tends to be wealthier than northern Germany, even though the north industrialized somewhat more quickly.

"Interestingly, the relationship generally holds within countries as well. The northern USA is wealthier than the south"

Yes, but it's inverted in Canada. The southern parts of Canada that border the US are populated and productive and the northern parts are essentially vacant.

JWatts,

Right, as it is in Scandinavia. Probably the sweet spot for development is somewhere in the cooler temperate bands; the Polar or near-Polar regions are too cold.

Yes, that sounds logical.

Daniel Patrick Moynihan pointed out that states' average NAEP test scores correlate at -0.52 with distance from the Canadian border.

This relationship remains true for a lot of measures of performance.

Southern India is richer than Northern India. Southern India has not winter to speak of.

Southern India has benefited from being a major trading crossroads since the monsoons were mastered by navigators in Hellenistic times.

GDP is the wrong measure. If you mine coal or pump gas, or produce firewood, or produce insulation, or build appropriate buildings, or plow snow, or anything else needed to live as a modern society in the winter, that counts towards GDP. If you live where you don't need to do those things, you don't get the GDP from them. Similarly with urbanization. If the weather is mild, you can have longer commutes in the winter because you don't need extensive snow removal, you don't have to worry about extended networks of power lines being disrupted by ice storms, etc. It costs more to be spread out in a cold climate than a warm climate, so people are less spread out.

As for the change over time, well, it is obvious that our ability to survive cold winters has improved due to technological advances in all relevant fields, so there are bigger changes where the technological advances matter more. So the reason for the direction of the trend is obvious. Whether or not there is a meaningful "reversal", using some fixed metrics that loosely approximate what you actually care about, but whose quantitative relationship to what you care about changes dramatically over time, is still really up in the air.

Aren't we just seeing the "Reversal of Fortune" proposed by Acemoglu and Robinson??
And their answer is much simpler than this tortured new model: Institutions caused the reversal of fortune.

yes, they show exactly the same thing and have a much simpler explanation for it. was totally stunned that this is presented as a "gee whiz" new thing and that's not mentioned at the top here. its not like that was a very recent incredibly high profile book or anything.

Ok, to be fair, the very first citation in the paper is to the A & R paper on this.

I'm just going to jot down a few points here and not try to actually explain anything. I'm not smart enough to explain things, what with my low IQ and all:

1. Up north people have this stuff called soil. We don't really have that. We have pebbles coated with dust, sand, and sometimes clay or bauxite. Dirt in warm high rainfall areas tends to be leeched while in dry areas it tends to blow away.

2. Agriculture is easy up north. Frosts and snows kill off insects and other pests that otherwise would be endemic and melting snowpacks make for reliable water supply. Of course, now they are disappearing you are starting to know how we warmies feel.

3. High humidity reduces transpiration which reduces agricultural productivity. Basically plants don't like sticky weather either.

4. Horrible dryness can help kill pests somewhat similar to cold weather, but these places are unlikely to have growing seasons with reliable rains. And that makes things tricky. You can try to rely on complex irrigation systems, but they tend to be vulnerable to barbarians. And they tend to become reservoirs of disease which cold weather would help take care of up north.

And it took a while for crops and farming techniques to be well adapted to the colder climates so people could bring out the potential there.

Trade. If you can go outside and pick what you need, why trade. Northern climates need things from elsewhere that aren't available locally; spices, fuel, food, etc. This drives trade which then establishes trade routes, transportation capacity and destination markets. As the demand for both food and manufactured goods increases, the labor demands of food production in the warmer climates pushes out the possibility of industrial development, and visa versa for the northern climates.

Historical accident. Europeans happen to be the first people to really master the art and science of massive wealth creation. They used some of this wealth to buy ocean-going ships and guns. When they found a spot that was physically a lot like Europe, they moved in and took over, which made the place culturally and economically a lot like Europe as well. And if a native culture could resist Europeans with guns, that correlated strongly with both pre-existing wealth and willingness to adopt European ideas and institutions along with their own. If a place was only somewhat like Europe, say by being uncomfortably but not intolerably warm to Europeans, a modest number of Europeans would move in and set themselves up as a local elite, introducing European ideas and institutions to produce a hybrid culture that could more efficiently produce wealth for the colonial overlords. If a place was very unlike Europe, say by being intolerably hot and disease-ridden, only a few Europeans would bother to show up and would limit themselves to demanding that the natives hand over their gold, rubber, spices, slaves, or whatever other valuable extractive resources were at hand, in exchange for whiskey, trinkets, and Not Getting Shot Today.

And really, for this purpose you can almost substitute "Britain" for "Europe". When the British got out of the Empire business, we started to see regression to the (now greatly elevated) mean.

Well, people tend to forget the Russian expansion into Asia (including Siberia). As it was done overland and not many intriguing English-language chronicles exist, it is sort-of invisible.

The mechanisms (and the results) there were absolutely different from the English colonial expansion.

That is something I would like to know more about, yes. Do you know of any good English-language summary works?

I will note of course that Russia is itself a creation of Northern European colonialism, so my hypothesis still sort of fits. And pretty much the same colonists who reshaped England into its modern imperial form. Wherever the Varangian/Norman raiders and traiders find hospitable enough to actually conquer and settle down, you get massive wealth creation in subsequent centuries...

Fricking Vikings. It's all their fault we're so rich :-)

I am afraid that I do not know any good tips in English. I read a Czech-language book on this topic once. I will look around on Amazon though. The Russian expansion into Siberia took about 200 years and was outright fascinating. Some encounters were almost direct parallels to the Indian Wars in the USA.

Siberia had a "wild, wild West" (Ok, East) aspect to it. Peasants escaping serfdom would head that way. And of course there were religious hermits seeking solitude far, far from civilization, and missionaries seeking to convert the heathen. The government was mainly interested in making sure no Mongol horde ever came galloping west again.

Your model is simpler and better explains the current state of world civilization.

Europeans happen to be the first people to really master the art and science of massive wealth creation.

No. There are some key differences between the cultural practices of people inside and outside the Hajnal lines.

China mastered wealth creation, warfare, art, science, and guns. Why did it go into a tailspin and Europe didn't?

I think part of it was the mercantilist mindset and arrogance of Chinese rulers.

I don't think the Chinese actually mastered any of those things, except maybe art. They took an early lead, then mostly stagnated, not quite reaching deepwater navigation or the joint stock corporation and well short of the industrial revolution or the breechloading rifle. Mercantilism + elite arrogance may have played a role in that, and of course European colonialism along the fringes played a role in ending it.

If we want to play geographic determinism, lack of interior barriers maybe makes easier for a Chinese emperor to conquer and hold China than it is for a European emperor to conquer and hold Europe. But mostly I think it is cultural.

1. Cold winters trigger larger, stronger, more weatherproof buildings
2. Crop yields not as rich with shorter growing seasons, so trade is a higher % of economy. More density = more efficient trade
3. Tropical diseases increase mortaility and reduce productivity.

Sure, but if climate was going to automatically lead to high productivity why didn't we see rival civilizations every where else in the world that has cold winters?

Because Siberia and England have very different climates. Dont confuse correlation with determinism. Not every cold place is going to exhibit the qualities of most cold places.

"Because Siberia and England have very different climates. "

Well sure, but England and "New England" or the Great Lake Regions or the US north west have roughly the same climate,.

Financial innovation. What? Yes, financial innovation created the first futures market, and with those markets, a more dependable supply of commodities (the rice futures market being the first). Why in colder climates? A greater need for a dependable supply of commodities, weather being a critical factor; necessity is the mother of invention. With the success of futures markets, other financial innovations soon followed, facilitating economic development and trade. Of course, financial innovation is just another term for risk sharing. As Professor Shiller likes to say, in a perfect world all risks would be shared, so that the per capita costs would be nominal. Risk sharing is essential in colder climates and, hence, collaboration became the norm. How much collaboration do we observe in hot climates today?

What "reversal"? The independent variable is urbanization rate in the first pair of graphs, population density in the second. Not at all the same thing.

I believe the reversal that Tabarrok refers to is real, at least as trend, but you're right that the chosen data sets have a big Apple/Orange thing going on.

For example, compare the states of New York (USA) and Andhra Pradesh (India). New York has a population density of ~150/km^2, Andhra Pradesh is ~300/km^2. New York state is ~85% urban, Andhra Pradesh is ~30% urban. The metric that suggests Andhra Pradesh ought to be considered more developed than New York, or even that we ought to suspect Andhra Pradesh is twice as urbanized as New York, is Just Wrong. Andhra Pradesh has mastered the art of cramming the maximum number of rice-farming peasants into each hectare, and not much else.

Use the U.S. as an example to keep the institutions somewhat constant. What are the variables with northern states who are wealthy and also peaceful vs southern states that are the opposite. Look at what varies and see if it matches anything on the global scale.

Prior to the modern era, population was sparse in extreme northern climes due to the sparsity of food. The size of animals and people had practically nothing to do with it. There's also lots of big animals and some big people in Africa, by the way.

With industrialization, far northern countries could support larger populations, who tended to to crowd into cities due to their dependence on industrial fuels. Also sometimes they are living in towns like Norilsk in the middle of a frozen wasteland where practically nobody lived until industrial resources were found there.

The authors construct their argument by using the outlier data points of the far north as the sole basis of fanciful trend lines. Strip off the far north outliers from their pre-industrial and contemporary datasets and you're left with two similar globs showing no discernible trends or change in trends whatsoever.

Surely there was a gradual shift in population and development and political dominance from the semitropics and southern temperate zones (from Egypt and southern Turkey across to northern India) to further and further northern climes. But that was mostly done by 1500, so this data doesn't help at all.

Besides, the equator hasn't been more populous or developed than the northern semitropics since sometime way back in the paleolithic.

At extreme latitudes, the useless people leave or die.

There you go. Nine words. Where's my doctorate?

This raises JWatts question: "Where were the advanced Native American civilizations?"

Not that your theory is obviously wrong, but there's clearly more to it than that.

They were in latitudes higher than the equator.

Obviously local geography plays a part. Just because higher latitudes support faster development in general doesnt mean that we will see faster development in every high latitide place. Climate in England is very different from climate in Canada or Siberia.

Climate in England is pretty similar to climate in Newfoundland, Atlantic Canada, Maine, British Columbia, Washington, and Oregon, though, right?

Native Americans were a geographically diverse bunch and plenty of them lived in these borderline climates. But when Cabot shows up, he doesn't find aqueducts or coliseums or big ships with cannons.

I think whatever happened to make England must be something pretty rare, or at least more rare than England's climate.

Ceasar didn't find bronze age armies in England, he found primitive tribes. This is reflected in the chart showing that in 1500 economic development was negitively correlated with high latitudes.

I suspect the reason for the relationship is simpler than that. In a pre-Industrial setting everyone is a farmer or hunter/gatherer. Population density is based on the calorie density of the underlying ecology, food density is higher closer to the equator so productivity goes up.

Industrialization increases farm productivity and breaks this relationship. Northern latitudes have smaller labour pools and a more hostile climate translating into a larger relative payoff from industrialization. Northern cultures thus make a higher investment in technology and end up reaping a higher payoff allowing for urbanization and high population density.

This would explain why Native Americans had the old relationship to latitude, the technology to significantly improve their climate relationship simply wasn't available.

This is very similar to John Schilling's "historical accident => technology applicable to Europe-like environments" theory above. The difference is the bit about "a more hostile climate translating into a larger relative payoff from industrialization," which is not obvious to me. It might be true, but it's not obvious.

In any event, I was arguing against the theory put forward by The Other Jim and others that in the pre-modern world the challenge of dealing with snow turned some cavemen into geniuses through evolution, which I think is probably oversimplifying things. Which isn't really what you're advocating in your response.

Yeah, I don't buy the evolutionary argument. There's simply too many other factors that play into intelligence in a big way to be able to claim that genes explain the differences between different human sub-populations. Particularly when the "smart" groups seem to change every few generations.

The hostile climate does make sense to be, consider the life of a modern African tribesman, not perfect but fairly comfortable. Now contrast that with the life of someone trying to live an ancestoral life in Norther Canada or Northern Europe, obviously possible but you don't get to wander around outside half naked picking fruit.

There might be another effect at work too. Native American populations in Canada are infamously poor, yet when you look at per capita income the three regions with a highest proportion of natives are 3 of the 4 richest regions in Canada

http://en.wikipedia.org/wiki/List_of_Canadian_provinces_and_territories_by_gross_domestic_product

Now the main factor here is they're resource based economies, per capita is high because expenses are super high making pay high as well (though population density is very low).

Perhaps that's a second factor that occurs in Northern economies. Because resources are more expensive and labour is scarce an individual worker is able to demand a higher wage. These higher wages increase aggregate demand and lead to greater economic development overall.

The Kelts were not "primitive". Technologically they and the Romans were at the same level, in fact Keltic ironwork was slightly superior. However there were fewer of them and they lived in scattered settlements, not large cities. The Romans also benefited from having the Mediterranean and all its trade at their doorstep, and from the legacy of Greece and civilizations in the Middle East.

"Yeah, I don’t buy the evolutionary argument. There’s simply too many other factors that play into intelligence in a big way to be able to claim that genes explain the differences between different human sub-populations."

For what it's worth, the "cold drives evolution of intelligence" and the "genetic endowment influences the differential paths of societies" theories are pretty different and can't be dismissed with the same arguments. I'm pretty skeptical of the first, but I don't feel the second can be dismissed in a convincing way at this point.

JonFraz,

Maybe Britons were superior in small defined areas, but in general I think the Romans were far more advanced.
http://en.wikipedia.org/wiki/Roman_technology

LordActon,

That genes play a role in society development is possible, but I don't think there's really much evidence for that fact.

Do Egyptians and Romans have an advantage because of the dominance of Ancient Egypt and Rome? What about Germanic peoples because of the classical composers? Do the Eastern Stepps have brillant warrior genes because of the Golden Horde? Perhaps Arabs have superior technical minds because of their pre-renaissance scientific supremacy. Are Irish inferior because of their traditional lower level of dominence in relation to England?

You go through history and certain cultures go through periods of broad dominance and then subside. I don't see any reason to assume that any of the factors we see now are due to genetic factors when there are such obvious other factors at play, including the role of climate presented in this post.

"That genes play a role in society development is possible, but I don’t think there’s really much evidence for that fact."

A lot of evidence is claimed, but there are many possible confounds.

In a generation we'll have a pretty good genetic history of humans and we'll know whether the various population choke points had any meaningful impact on the peoples that went through them. So it won't be speculation for much longer.

Latitude can be trumped by altitude. Conditions on the Altiplano are likely more difficult than in Scandinavia.

Seven generations from now the divide will be Terrestrial/ExtraTerrestrial.

And there'll be people trying to explain away why the average IQ on Mars is 123 when on Earth it's 96.

Martian Privilege.

I sincerely hope so. I'd find it interesting if the divide were actually in gravity well/outside a gravity well. The savings from not having to escape a gravity well or just fight it to go somewhere might be the linchpin.

"The savings from not having to escape a gravity well or just fight it to go somewhere might be the linchpin."

I think the cost of leaving the gravity well is just insignificant. Sure it would factor into bulk shipping. So, I would expect iron ore or even steel to be delivered to Earth, but not from Earth. But the energy cost of moving humans around is relatively paltry. Granted, it might seem vastly expensive from today's point of view, but flying to Las Vegas for the weekend would have seemed insane 100 years ago.

The limiting factor for transport of goods around the solar system is going to be time, not energy. Eventually we'll think of the energy costs of going to Mars via the minimum energy path as no big deal, but it takes vastly more energy to significantly cut the transit time or to ignore launch windows so that will stay as a consideration into the much more distant future.

Michael Hart's "Understanding Human History" has much to say on the latitude issue:

http://www.vdare.com/articles/a-real-diamond-michael-harts-understanding-human-history

Considering that it's from vdare I'm going to guess that it's mostly talking about race.

Too bad you can't see it since it's behind a paywall.

Colder climates lead to better and faster development of energy sources and uses, permanent dwellings, and food preservation. Paucity of resources leads to more efficient use.

Higher latitudes also have the greatest resource for development: trees. They are energy, shelter, communication, weapons, and food. Castles were built with entire forests. Trees were the main resource driving Europeans to America.

- Limitations of GDP as Welfare Indicator: http://zielonygrzyb.wordpress.com/2012/07/31/limitations-of-gdp-as-welfare-indicator/

- Invention of press and advantage in propaganda war against southern europe(in the european continent)

- Christianity

Tabarrok, you could check out pre-industrial body weight to examine your theory.

Let's say pre-industrial North Europeans are around 66 kilos, Indians around 60 kilos, you could support 1 more person per 9 in India. I think that might be feasible before the introduction of mass obesity and overweight from modern diets.

Is that going to lead to a major development divergence?

I'll chime in again and agree that an actually sensible idea might be that in the pre-Industrial period, primary productivity of agriculture - higher on average in warm climates - was a larger determinant of population size, which then determines urbanisation.

Further, even comparing cold (grass and plains and forest) and warm (deserts) low primary plant productivity regions, cold regions would also tend to have extensive and pastoral systems, which push away from urbanisation as well, but towards lots of transport tech, which particularly when combined with a check on violence and towards accumulation (settled pastoralism) pushes towards mechanical sophistication, energy use sophistication and sophisticated economic independence and cooperation in general (the Nick Szabo theory) and cultural personality types that maneuver well in that environment.

Another factor in this would be that, important as well would be the structure of world trade. Cool climates, within Eurasia tended to be relatively peripheral to a world trade system focused on the Indian Ocean. Not the case during the Age of Exploration to Industrialisation. Our cool climate places in Europe further tended to be very coastal, which is also helpful for being integrated into big booms in fishing and transportation.

But really this is just so Tabarrok can see our comments, not cos he's looking for a theory. None of the comments I've put here, for instance, is really simple or elegant.

Actually I think Acemoglu explained this a while back -- the higher latitudes tended to lack the exploitable labor and mineral wealth (a common trope in the early-scientific or pre-industrial age was that minerals were formed by the rays of the sun -- the most noble metals by the most direct rays, and hence found in lower latitudes), therefore they developed institutions that were much better suited to creating wealth when the Industrial Age rolled around.

Heat. Reliable heating and heat containment, think glass commonly in windows, allows real population growth on resources that are not exhausted by a Mellennia of human use. The new areas innovate away from calcified Patterns of Sustainable Specialization and Trade as well.

The US South has the same thing going based on the invention of cheap air conditioning and refrigeration.

Necessity is the mother of invention, and it's tough wintering beyond the 30th latitude or so. It was bound to happen eventually as agricultural productivity became a less integral determinant of surplus, population and geographic concentrations of power. Inventiveness pays, on average, and for centuries it did so in the form of colonial dividends (which I would argue helped to multiply on initial surpluses to fuel possiblities of industrialization).

Surely this has everything to do with the capability to thrive within a particular environment. When our species expanded very rapidly (300,000 thousand years ago?) they would struggle in what is still a comparatively hostile environment, and this would be the primary push factor out of Africa. Is it really surprising modern economic growth, urbanisation, weapon superiority etc grew out of the temperate regions; the first to break the dependency on the agricultural cycle?
If anything this factor to going to be more prominent as the evidence shows it is the equatorial regions that are suffering the most from climate change. 500 years from now the crowding in the temperate regions will be even more pronounced, making today's fortress policies of the USA and Europe unachieveable.

It's just one (counter) example, but until the last of them died out in the late 19th century the Tasmanians were the most primitive people on earth, at an early Stone Age level, yet they lived in a cool temperate climate well away from the Equator.

My best guess is "luck", but several others occur to me:
2. If it's cold out, I stay in. Its boring to stare at a fire all day. Maybe I can think of something else to do... (Time structuring)
3. I want to see the graph of the average wealth per person graphed vs latitude (or |latitude|) . Not countries.
4. Some think IQ or culture played a role: Why is IQ considered more likely that it's inverse? (Stupid impetuousness) Seems to me Religion has been broadly ignored in these comments (stupidly, imho).
5. The Holocene is an interglacial period, our species history is encompassed within this gradual warming period. Call it the Microsoft Effect. (They're never the innovators, they come in second and then dominate ) Importance of colonization South to North and Old World to New hasn't been adequately addressed here - in the sense of potential for a "do over", experiments in different social networks, as well as modification of previous examples. Resource availability also figures into this. Displacing well established natives (as opposed to nomadics) is difficult.
6. I suspect the possibility that Europeans are just more aggressive than other phenotypes. But maybe its just the impetuousness gene? Wanderlust? We are one species, I'm pretty sure we're NOT are one breed.
7. The basis of Industrialism was Agriculture, the Microsoft Effect allows those late to the party to leap frog some of the mistakes of the early adopters. Its pretty well established where and when agriculture evolved.

Your mitochondria change from south to north. At the extremes northern mitochondria are tending to produce more heat and equatorial mitochondria are producing less heat, stabilizing body temperature. If the cellular energy changes the body energy available may differ. Migration and air-conditioning are rapidly distorting the evolutionary state. This might help to explain "island time." Or the story goes that Columbus advised : "don't do anything until I get back." Bu that only explains the economics of the Caribbean.

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